The Boy Scouts of America Files for Bankruptcy

The Boy Scouts of America has filed for bankruptcy. (Image:  BSA)
The Boy Scouts of America has filed for bankruptcy. (Image: BSA)

The Boy Scouts of America (BSA) recently filed for Chapter 11 bankruptcy protection. The organization has been caught up in several sexual abuse claims and has suffered losses as part of providing compensation to the victims. BSA is one of the largest youth organizations in the U.S.

Bankruptcy

“The national organization of the Boy Scouts of America has initiated a voluntary financial restructuring to ensure we can equitably compensate all victims of past abuse in our programs, through a proposed Victim’s Compensation Trust. I encourage you, and all victims to come forward and file claims so you can receive compensation from this Trust. We will provide clear notices about how to do so,” Jim Turley, the national chairman of the BSA, wrote in an open letter to the victims (CNN).

Rumors that the organization is considering bankruptcy began to circulate in the media back in December 2018 when the Boy Scouts hired the law firm Sidley Austin LLP. In the 14 months since December 2018, the organization has made several changes, including allowing girls to join the Scouts. The organization has also partnered with 1in6, an organization catering to male sexual abuse survivors, to provide support to its victims.

 BSA is one of the largest youth organizations in the U.S. (Image: BSA)

The BSA is one of the largest youth organizations in the U.S. (Image: BSA)

The BSA is estimated to have assets worth around US$1 billion. The organization’s tax filings show that it owns almost US$680 million in stocks and bonds, US$102 million in properties, and US$55 million as cash in the bank. Considering that thousands of victims have filed claims against the BSA, the bankruptcy is expected to be much bigger in scale than any other sexual bankruptcy case in American history.

In addition to the US$1 billion assets that the BSA owns, the organization has many more properties at its disposal that are under the ownership of more than 250 local councils. These include hundreds of camps and reservations throughout the country that can potentially be worth billions of dollars. The BSA argues that these assets are financially and legally independent of the organization and as such cannot be considered for compensating victims. In fact, these assets were not listed as part of the bankruptcy claim.

John Manly, a lawyer who represents a claimant, dismisses such arguments. “The idea that the councils don’t have any relationship to Scouting is like arguing that General Motors doesn’t have any relation to its factories,” he said to The New York Times. Manly notes that if the BSA is made to compensate 5,000 victims with a US$1 million payout each, the organization will have to shell out US$5 billion in total, which is far greater than the value of assets listed in the bankruptcy.

BSA is arguing that the hundreds of camps owned by local councils cannot be considered for compensating victims. (Image: BSA)

The BSA is arguing that the hundreds of camps owned by local councils cannot be considered for compensating victims. (Image: BSA)

More revelations

As news about the bankruptcy claim spread, many more people have come forward with tales of sexual abuse and threats. A 73-year-old man recounts how he was abused at the organization when he was a 14-year-old boy. A scoutmaster had invited him to a lake so that they could gaze at the stars.

“I was very naïve… But when he grabbed my groin, I immediately reacted… He threatened me with a machete… Even now, when I think about it, I get this gut-wrenching feeling. Because of his threats, I never told anybody,” he said to NBC News. Attorney Michael Barasch, who represents hundreds of sex abuse survivors, accused the organization of trying to evade responsibility by filing for bankruptcy so as to limit the money paid out to the victims.

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