U.S. judge rejects Boy Scouts’ $2.7 billion sex abuse deal

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(Reuters) -A U.S. bankruptcy judge on Friday rejected the Boy Scouts of America’s reorganization plan and underlying sex abuse settlement, leaving the national youth organization’s ability to emerge from bankruptcy unclear.

U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware, said in a written opinion that she could not approve all aspects of the plan and settlement, which would have established a $2.7 billion trust to compensate more than 80,000 men who say they were sexually abused as children by troop leaders.

Silverstein rejected some aspects of the settlement, saying she could not approve a $250 million settlement between the Boy Scouts and the Church of Jesus Christ of Latter-day Saints, and could not make determinations related to the Boy Scouts’ insurance coverage. The judge suggested that the overall deal was going to take significant time to rework, writing that the Boy Scouts “have some decisions to make.”

Silverstein’s ruling follows more than two years of Chapter 11 proceedings for the youth group, which filed for bankruptcy in February 2020 after being hit by a flood of sexual abuse lawsuits when several U.S. states passed laws allowing accusers to sue over allegations dating back decades. Since the outset of the case, more than 82,000 abuse claims have been filed.

Those claimants became creditors of the organization, who had to sign off on any plans to restructure and exit bankruptcy.

The amount of money claimants stood to gain from the $2.7 billion trust would depend on the severity of the alleged abuse, as well as where and when it occurred, among other factors. Claimants could receive as little as $3,500 or up to $2.7 million for the most severe cases, according to court papers.

The Boy Scouts has apologized and said the organization is committed to fulfilling their “social and moral responsibility to equitably compensate survivors.”