DOVER, Del. — A Delaware bankruptcy judge has approved parts of the Boy Scouts of America’s reorganization plan but has rejected other provisions, saying in a...
In the meantime, the cash-strapped BSA has spent more than $327 million in fees and expenses in the bankruptcy and continues to bleed money, with no end in sight. It also remains unclear when any of the 82,000 sexual abuse claimants in the bankruptcy might receive any compensation for their abuse.
While some of those insurers later negotiated settlements for a fraction of the billions of dollars in liability exposure they potentially faced, other insurers continued to oppose the plan.
Such third-party releases, spawned by asbestos and product-liability cases, have been criticized as an unconstitutional form of “bankruptcy grifting,” where non-debtor entities obtain benefits by joining with a debtor to resolve mass-tort litigation in bankruptcy. Some abuse survivors argued that releasing their claims against non-debtor third parties without their consent would violate their due process rights. The U.S. bankruptcy trustee, the government’s “watchdog” in Chapter 11 bankruptcies, argued that such releases are not allowed under the bankruptcy code, and that the scope of the proposed releases in the BSA plan, potentially extending to tens of thousands of entities, was unprecedented.
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