In a significant development in the Boy Scouts of America’s plan of reorganization, the U.S. Court of Appeals for the Third Circuit recently largely upheld that plan, which includes a $2.46 billion settlement trust for survivors of child sexual abuse at the hands of the BSA’s representatives.
The Third Circuit’s ruling affirms the core of the bankruptcy plan, which was overwhelmingly approved by approximately 86% of the abuse survivors who voted. The plan established a pathway for survivors to file claims and receive compensation through a structured Trust Distribution Procedure.
For many survivors, this means that after years, and in some cases, decades, they are closer to finding some form of closure and support. This decision also means the settlement trust, established under the BSA’s bankruptcy plan, can continue providing financial compensation to survivors. The Trust has already distributed more than $138 million to approximately 20,000 survivors since its establishment in April 2023.
At the time of the bankruptcy proceedings and the formation of the Plan of Reorganization, Eisenberg Rothweiler, along with its co-counsel, represented the largest group of claimants in the U.S. Eisenberg Rothweiler’s efforts on behalf of their clients in pursuing their clients’ claims and negotiating the $2.46 billion trust were instrumental in bringing about the largest sexual abuse settlement in U.S. history at that time.
The Third Circuit ruled that the U.S. Bankruptcy Code barred it from reaching the merits of the appeals of about 140 abuse claimants who objected to the BSA’s plan’s non-debtor releases and insurance settlements that, they argue, prevent them from filing future sex abuse lawsuits against involved insurers, local Boy Scout groups, and troop sponsors that contributed to the victims’ compensation fund.
The Third Circuit also addressed challenges from various Boy Scouts insurance providers, partially remanding the plan. While it affirmed that the plan and confirmation order already preserved the necessary rights and defenses for one group of insurers, the court sided with the Allianz insurers regarding their argument that the U.S. Supreme Court’s recent Harrington v. Purdue Pharma decision required more explicit protection of their rights to pursue claims against insurers who have already settled with the Boy Scouts.
“This has been a long and painful process for our clients and other BSA sex abuse survivors. The Third Circuit’s decision marks a crucial step towards ensuring that the tens of thousands of survivors who have bravely come forward will finally receive some measure of justice and
compensation through what was the largest sexual abuse settlement in U.S. history at the time it was reached,” said Stewart Eisenberg.
“From Day One, our sole focus throughout this litigation and during settlement negotiations has been ensuring that our clients were fairly compensated for what the BSA and its representatives put them through. We are happy for our clients that the claims resolution and distribution processes can continue, and that we are one step closer to justice,” said Joshua Schwartz.
