Boy Scouts Of America File For Bankruptcy Following Sex Abuse Lawsuits

The Boy Scouts of America have filed for bankruptcy protection, after being barraged by hundreds of sex-abuse lawsuits.

The move comes with hopes the organisation can work out a potentially mammoth victim compensation plan that will allow the hallowed 110-year-old organisation to carry on.

The Chapter 11 filing in federal bankruptcy court in the US state of Delaware, sets in motion what could be one of the biggest, most complex bankruptcies ever seen.

Scores of lawyers are seeking settlements on behalf of several thousand men who say they were molested as scouts by scoutmasters or other leaders decades ago, but are only now eligible to sue because of recent changes in their states’ statute-of-limitations laws.

By going to bankruptcy court, the Scouts can put those lawsuits on hold for now. But ultimately they could be forced to sell off some of their vast property holdings, including campgrounds and hiking trails, to raise money for a compensation trust fund that could surpass a billion dollars.

The bankruptcy petition listed the Boy Scouts' assets as between US$1 billion and US$10 billion, and its liabilities at US$500 million to US$1 billion.

“Scouting programs will continue throughout this process and for many years to come," the Boy Scouts organisation said in a statement.

”Local councils are not filing for bankruptcy because they are legally separate and distinct organisations."

The Boy Scouts are just the latest major American institution to face a heavy price over sexual abuse.

Roman Catholic dioceses across the country and schools such as Penn State and Michigan State have paid out hundreds of millions of dollars in recent years.

The bankruptcy represents a painful turn for an organisation that has been a pillar of American civic life for generations and a training ground for future leaders.

Boy Scouts saluting the American flag. Image: Getty

Achieving the rank of Eagle Scout has long been a proud accomplishment that politicians, business leaders, astronauts and others put on their resumes and in their official biographies.

The Boy Scouts’ finances have been strained in recent years by declining membership and sex-abuse settlements.

The number of youths taking part in scouting has dropped below two million, down from more than four million in peak years of the 1970s.

The organisation has tried to counter the decline by admitting girls, but its membership rolls took a big hit January  1 when The Church of Jesus Christ of Latter-day Saints — for decades a major sponsor of Boy Scout units — cut ties and withdrew more than 400,000 scouts in favour of programs of its own.

The financial outlook had worsened last year after New York, Arizona, New Jersey and California passed laws making it easier for victims of long-ago abuse to file claims. Teams of lawyers across the US have been signing up clients by the hundreds to sue the Boy Scouts.

Most of the newly surfacing cases date to the 1960s, '70s and '80s; the organisation says there were only five known abuse victims in 2018.

The Boy Scouts credit the change to an array of prevention policies adopted since the mid-1980s, including mandatory criminal background checks and abuse-prevention training for all staff and volunteers, and a rule that two or more adult leaders be present during all activities.

“We are outraged that there have been times when individuals took advantage of our programs to harm innocent children,” the BSA's president and CEO Roger Mosby said.

“While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process, with the proposed trust structure, will provide equitable compensation to all victims while maintaining the BSA’s important mission.”

Boy Scouts of America Headquarters in Texas. Image: Getty

In many ways, the crisis parallels the one facing the Catholic Church in the US.

Both institutions boast of major progress over recent decades in combating abuse but both face many lawsuits alleging negligence and cover-ups, mostly decades ago.

Among the matters to be addressed in bankruptcy court: the fate of the Boy Scouts’ assets; the extent to which the organisation’s insurance will help cover compensation; and whether the victims' lawyers will seek to add to the fund the assets of the Scouts’ more than 260 local councils.

“There are a lot of very angry, resentful men out there who will not allow the Boy Scouts to get away without saying what all their assets are,” said lawyer Paul Mones, who represents numerous clients suing the BSA.

“They want no stone unturned.”

Amid the crush of lawsuits, the Scouts recently mortgaged the major properties owned by the national leadership, including the headquarters in Irving, Texas, and the 140,000-acre Philmont Ranch in New Mexico, to help secure a line of credit.