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Boy Scouts Bankruptcy: $800M Settlement by Insurer

DOVER, Del. DOVER, Del. (AP) -- In a tentative settlement in the Boy Scouts of America bankruptcy matter, one of the largest insurers of the organization would contribute $800 millions to a fund for victims of child sexual assault.

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Boy Scouts Bankruptcy: $800M Settlement by Insurer

In return for being free from any further abuse claims, Century Indemnity Co. will contribute $800 million to the fund. This payment would increase the trust's value to $2.6 billion. It would be the largest settlement for sexual abuse in American history.

This settlement comes at a time when more than 82,000 victims of sexual abuse have until Dec. 28 to vote on an earlier announced Boy Scouts restructuring plan.

The plan required the Boys Scouts and 250 of its local councils to contribute $820 million in cash, property and other resources to a fund for victims. They would also assign certain insurance rights to this fund. In return, they would release the national organization and local council from any further liability in relation to sexual abuse claims.

The settlement agreement also covers another of Boy Scouts' major insurance companies, The Hartford, as well as The Church of Jesus Christ of Latter-day Saints (also known as the Mormon church), which was the former largest troop sponsor. The Hartford agreed to pay $787m to the victims' fund and the Mormons to contribute $250m. Both entities will be exempted from further liability in the event of child sex abuse allegations.

Subject to court approval, the Century settlement provides additional contributions by the BSA and local councils for chartered sponsoring organisations. These include a $40m commitment by the local councils, and additional payments from the BSA or local councils of up to $100M due to the growth in membership due to chartered organizations' continued sponsoring of Scouting units.

The Boy Scouts stated in a prepared statement that "This is an important step forward in BSA's efforts equitably compensation survivors." "In addition to continuing negotiations with other insurances, the BSA worked diligently in creating a structure that will permit the Roman Catholic-affiliated and United Methodist-affiliated Churches who sponsored Scouting units contribute to the settlement trust to compensate survivors.

Boy Scouts of America, Irving, Texas sought bankruptcy protection in February 2020. They wanted to stop hundreds of individual lawsuits and establish a fund for those who claim they were sexually abused when children. The organization was already facing 275 lawsuits, but it now faces more than 82,000 sexual abuse claims.

An ad-hoc group, the Coalition of Abused Scouts for Justice (representing about 18,000 abuse claimants), stated in a press release that the Century Settlement is yet another reason for victims of abuse to vote for the BSA reorganization plan.

Anne Andrews, a co-founder of the coalition and attorney, stated that the coalition is creating the largest compensation fund for survivors. It's also the only one on the table and disappears when there's a 'no vote." "The coalition continues to work with Boy Scouts of America to improve safety and accountability to ensure that no child has to suffer the terrible harm and abuse they have seen."

The coalition is made up of more than twenty law firms and has been a dominant force in bankruptcy proceedings despite the existence a committee that represents the best interests all abuse claimants. It has also been involved in disputes regarding information sharing and the design of the trust distribution and reorganization plans by the BSA.

The plan's opponents include several law firms as well as an official abuse claimants committee, which was appointed by the U.S. bankruptcy trustee. The committee said that the plan was "grossly unfair" because it only addresses a small portion of potential liabilities. They also discuss what they should and could pay.

For example, the committee stated that local Boy Scout councils will be able to settle for more than $1 billion, which is significantly more than they would need to carry out their scouting mission. The committee also pointed out that sponsors such as churches or civic groups can avoid liability in relation to abuse claims dating back to 1976 by simply transferring their interest in insurance policies purchased locally by the BSA and local councils, to the victims fund. This is without having to contribute any cash or property.

The News of the Century settlement was approved by an Indiana bankruptcy judge on the same day as a $380 million settlement regarding USA Gymnastics. It involved more than 500 victims of Larry Nassar's sexual abuse. This agreement also includes the U.S Olympic and Paralympic Committee. It is in addition to the $500m that Michigan State University agreed in 2018 to pay to settle more than 300 lawsuits brought against Nassar, an ex-associate professor and sports physician at the school.

The combined Nassar settlements total $880 million, which is an average of more that $1 million per victim. However, the proposed $2.6B settlement in the Boy Scouts bankruptcy averages around $31,600 per victim.

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