Boy Scouts Need $300M From Local Councils

Boy Scouts of America (BSA) is hopeful that it will emerge from Chapter 11 bankruptcy restructuring this fall, with $300 million from Local Councils to be contributed toward sexual abuse settlements, according to its latest court filings.

BSA will request voluntary commitments of its Local Councils to make contributions, which would be set forth in commitment agreements executed by each of the 253 councils. BSA would be required to file a report with the Bankruptcy Court by June 1 about the status of its efforts to obtain contribution commitments from Local Councils, according to a trove of documents filed on Monday that included an amended reorganization plan.

The amended Chapter 11 reorganization plan for Boy Scouts of America and Delaware BSA, LLC was filed in the U.S. Bankruptcy Court for the District of Delaware. Of the 379 pages in the amended plan, 259 pages are schedules and exhibits that identify artwork, national and local council insurance policies, and oil and gas interests that could fund the settlements.

The Irving, Texas-based BSA filed for Chapter 11 bankruptcy in February 2020 to restructure the national organization. Local councils are separate 501(c)(3) tax-exempt organizations and did not file for bankruptcy. The 111-year-old organization faces thousands of potential lawsuits over alleged sexual abuse of members over the years.

In a statement, Boy Scouts of America said it filed for Chapter 11 bankruptcy to “achieve two key imperatives: equitably compensate survivors who were harmed during their time in Scouting and continue to carry out Scouting’s mission for years to come.”

The amended reorganization plan is “a critical step in our emergence from bankruptcy,” the statement continued. “The plan demonstrates that considerable progress has been made as we continue to work with all parties toward achieving our strategy to provide equitable compensation for victims and address our other financial obligations so that we can continue to serve youth for years to come.

“There are still many aspects of the plan that we are refining through ongoing mediation, but the amended plan is an important step in demonstrating progress that we believe will ultimately lead to a final plan that the Bankruptcy Court will confirm.”

 

The statement also indicated that supplements to the plan will include more detailed breakdown of the process to compensate survivors and more details about how local councils will support that effort.

Survivors of sexual abuse in connection with activities associated with Boy Scouts of America had until Nov. 16, 2020 to file a claim. Survivors whose claims are approved may receive compensation from the bankruptcy. If the plan to reorganize BSA is approved, it could release claims that survivors hold against certain third parties, including Local Councils and organizations that sponsored their troop or pack.

In its latest tax filing in November, for the tax year 2019, the national headquarters reported total revenue of $408.6 million, up considerably from $285 million in 2018 on the strength of investment income of $145 million, up from $32 million, and program revenue of $116 million, up from $82 million. Contributions were $114 million, down from $143 million in 2018. Expenses were $430 million last year, outpacing revenue by almost $22 million though still smaller than the operating deficit of $58 million reported in 2018. Net assets were $408 million, down from $532 million in 2018.