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Frustrated judge asks BSA bankruptcy lawyers to work harder

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DOVER, Delaware (AP) – The Boy Scouts of America bankruptcy judge on Wednesday expressed frustration at the lack of progress in the case and ordered lawyers to work harder on a plan that compensates child victims of sexual abuse and ensures that the BSA can keep it running.

Delaware judge Laurie Selber Silverstein opened Wednesday’s virtual hearing by telling attorneys that she had read the “flurry of documents” they submitted recently, and that if she held the hearing in court rather than via Zoom, she could have a “chat” with them behind closed doors.

The judge dismissed the BSA’s request for an April 15 hearing to approve the disclosure statement outlining a reorganization plan submitted by the Boy Scouts earlier this month. He has been sharply criticized by lawyers representing victims of abuse.

“I don’t see some very necessary information and documents… that I would like to see during a disclosure statement (hearing),” Silverstein said. The judge postponed the hearing until the end of April and ordered lawyers to attend mediation sessions scheduled for later this month.

“Whether in person or via Zoom, I expect everyone to be there,” she said, telling the lawyers to “bring your toothbrushes and be ready to get to A resolution”.

“I don’t want to hear that someone decided it was embarrassing or that they couldn’t show up,” added Silverstein, noting that the professional and attorney’s fees in the bankruptcy case have already cost the Boy Scouts over $ 100 million.

“I think it’s a mind-boggling number, and progress needs to be made,” the judge said. “Victims must be adequately compensated and the Boy Scouts’ mission must continue … Every dollar in professional fees is a dollar that comes out of a creditor’s pocket. “

The Boy Scouts of America, based in Irving, Texas, filed for bankruptcy protection last February in a bid to stop hundreds of lawsuits and create a compensation fund for the men who were assaulted in childhood by Scout leaders or other leaders.

Jessica Lauria, lawyer for BSA, said she and her colleagues were frustrated that they could not reach consensus with creditors on a reorganization plan.

“We know we have a lot of wood to cut. I don’t think it’s the whole forest, ”she said, adding that it was essential that BSA come out of bankruptcy by the end of the summer.

“We are kicking off recruiting in earnest in the fall, and debtors need to put this bankruptcy issue behind them,” Lauria said. She also spoke of liquidity issues, with the bankruptcy case costing around $ 10 million per month. She added that the cost will only increase if litigation between lawyers for victims of abuse and BSA insurers continues to escalate.

The bankruptcy case has been bogged down by disputes over the provision of information by local Boy Scout councils about their financial assets, allegations by the BSA that hundreds of millions of dollars of its assets are restricted and inaccessible to victims of abuse, and the concerns of the BSA. insurers that lawyers for victims of abuse have submitted tens of thousands of claims without ensuring their validity.

Philip Anker, an attorney for some BSA insurers, noted that the organization had faced 275 abuse complaints filed before seeking bankruptcy protection and now faces more than 80,000 abuse complaints.

“Something doesn’t smell right,” he said.

Lawyers for victims of abuse made it clear from the start of the bankruptcy that they would go after campsites and other property and assets owned by local councils to contribute to a settlement fund. The approximately 250 local councils, which manage the day-to-day operations of the local troops, are not debtors in bankruptcy and are considered by the Boy Scouts to be legally separate entities, even though they share insurance policies and are considered to be “Related parties”. ‘in case of bankruptcy.

“I think there has to be a real change in attitude on the part of the boards as to what assets might be disclosed to creditors, what their alternatives are, so that they can make a decision on supporting the plan,” said James Stang, an attorney for the official tort plaintiff committee, which is responsible for representing the interests of all victims of abuse.

The current plan calls for a $ 300 million contribution from local councils into a trust for victims of abuse, although the form and timing of these contributions is uncertain. The BSA would contribute unrestricted cash in excess of the $ 75 million it needs to maintain its business, as well as its collection of Norman Rockwell paintings and other works of art. The BSA would also sell some of its administrative facilities and rights to oil and gas interests in several states, but the plan leaves many questions unanswered about what other compensation might be available to victims of abuse.

The official committee for victims of abuse said in a court filing Tuesday that without meaningful negotiation, the current plan is “the first step on a path that leads nowhere.”