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Court rules against insurers in Boy Scouts sexual abuse case

Court rules against insurers in Boy Scouts sexual abuse case

A federal district court in Delaware on Tuesday ruled against dozens of insurers who objected to a $2.46 billion trust for sexual abuse victims established by a bankruptcy court for the Boy Scouts of America, stating there was no evidence the settlement was not reached in good faith. 

The ruling by the U.S. District Court in Wilmington in In re: Boy Scouts of America BSA LLC, debtors concerned the Wilmington bankruptcy court’s September 2022 order, which confirmed a reorganization plan that included a global resolution of sexual abuse claims.

The 155-page ruling by Judge Richard G. Andrews said the plan channels to the settlement trust all abuse claims against Boy Scouts of America and related entities and those covered by settling insurance companies, observing that there are 82,209 “unique and timely claims” asserting abuse.

The bankruptcy court settlement provides at least $2.46 billion in cash and property to the trust, plus unliquidated assets, including insurance rights worth up to more than $4 billion, the ruling stated.

“The plan, if upheld, will ensure the survival of an American institution,” the ruling said.

Two groups of non-settling insurers objected to the plan.

Objecting insurers “argue on many fronts that the Plan did not meet requirements for confirmation, and I have carefully considered each of these arguments,” the ruling said.

“Based on the record, Appellants have failed to put forth the evidence that would demonstrate clear error in the Bankruptcy Court’s careful findings of facts,” the ruling stated.

Insurers “introduced no evidence of collusion or that any claims were fraudulent,” the ruling stated. “Moreover, the Bankruptcy Court found that the BSA did not collude with the Survivor’s counsel based on a careful review of the record,” and insurers “introduced no evidence to the contrary,” the judge said, in affirming the bankruptcy court.

Several lead attorneys in the case had no comment or did not respond to a request for comment.