A federal judge has upheld the Boy Scouts of America's $2.4 billion bankruptcy plan, clearing a legal challenge brought by insurance companies and abuse claimants.
It would allow the Texas-based organization to continue operations as it settles tens of thousands of claims by men who say they were sexually abused as child Scouts.
Judge Richard G. Andrews of the U.S. District Court in Wilmington, Delaware, approved the plan Tuesday, saying he found "no error in the Bankruptcy Court's determination."
In a statement, the Boy Scouts of America said the ruling "represents a pivotal milestone in the national organization of the Boy Scouts of America (BSA)’s financial restructuring case and solidifies a path forward for both survivors and Scouting."
More than 80,000 claims have been filed by men who say they were abused as children by troop leaders nationwide.
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Under the plan, which would establish the largest sex abuse compensation fund in U.S. history, the BSA would payout on just 10% of the $2.4 billion set aside for settlements.
The local Boy Scout councils offered to contribute at least $515 million, while the organization's two largest insurers — Century Indemnity and The Hartford — would be responsible for roughly $1.58 billion. Other insurers agreed to pay about $69 million.
The bankruptcy case was filed in February 2020, after the organization was hit with about 275 lawsuits, and was aware of another 1,400 claims.
Insurers opposing the plan argue that Boy Scouts of America filed bankruptcy in order to avoid contractual obligations that would have required the organization to help investigate, defend and settle claims. Insurers also accused the organization of working with claimants to inflate settlement values.
In his 156-page decision, Judge Andrews said the appellants "failed to put forth evidence that would demonstrate clear error in the bankruptcy court’s careful findings of facts."
The Boy Scouts of America has faced a significant decline in membership in recent years, amid mounting criticism over its handling of sexual abuse allegations.
The organization said it will continue to operate and serve youth but said safety is their "absolute top priority."
"We look forward to the organization’s exit from bankruptcy in the near future and firmly believe that the mission of Scouting will be preserved for future generations," the BSA said in a statement.
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