Based on new and lower estimates of how much it owes abuse victims, the Boy Scouts of America said it now expects to be able to pay in full on the sex-abuse claims that drove it to bankruptcy.
The youth organization said on Tuesday that the total value of claims eligible for payouts is now expected to be around $3 billion, the midpoint of a range of $2.4 billion to $3.6 billion.
The Boy Scouts' trust fund for resolving 82,200 abuse victims recently grew to at least $2.69 billion, thanks to contributions from the youth organization, its insurers, local governments, and others. The Irving, Texas-based youth organization stated that the trust could expand further and would cover all eligible claims in full.
The Boy Scouts said in a filing Tuesday in U.S. Bankruptcy Court in Wilmington, Del., that "survivors of abuse will be paid in full" under the chapter 11 reorganization plan.
In February 2020, the Boy Scouts declared bankruptcy in response to a slew of sexual-abuse lawsuits. The youth group, which has apologized to the victims, claims that new calculations show that its liability isn't nearly as severe as it previously thought.
Critics remained skeptical of the proposed reorganization, which is set to be debated at a hearing in late February.
The preliminary results of a vote on a compensation plan for victims fell short of the level of support sought by the youth group. The settlement plan was supported by 73.1 percent of the nearly 54,000 victims who voted in December. The Boy Scouts had hoped for 75 percent support, which would be more likely to be approved by the judge hearing its chapter 11 case.
Local governments have indicated their support for the settlement, as long as they are released from all liability for alleged sexual abuse. Bankruptcy courts have the authority to settle and release legal claims against non-bankruptcy parties, though this practice is fraught with controversy when creditors do not all agree on settlement terms.
On Tuesday, Richard Pachulski, a lawyer for a committee representing abuse victims, told WSJ Pro Bankruptcy that the Boy Scouts' claim that claims would be paid in full under the plan is "grossly misleading."
He claimed that the group's calculations were based on a "flawed analysis that significantly undervalues claims."
If the group is so confident that survivors will be paid in full, Mr. Pachulski believes it should provide a guarantee of that and be released from liability only if all claims are fully paid.
Mr. Pachulski's committee, according to the Boy Scouts, was breaching its fiduciary duty by encouraging votes against the youth group's plan.
Opponents of the youth group's plan claim that the compensation pool is insufficient to compensate survivors. Some victims' lawyers who oppose the settlement plan believe their clients would be better served if they took on individual local councils in state or bankruptcy courts.
However, Boy Scouts claims consultant Charles Bates stated that his most recent estimates ranged from $2.4 billion to $3.6 billion, compared to an earlier estimated range for total liabilities of $2.4 billion to $7.1 billion.
Mr. Bates examined 29 verdicts in Boy Scouts and other sexual-abuse lawsuits, as well as 517 previous settlements involving the youth organization. He stated that he believed the abuse claims in the 29 plaintiff verdicts had stronger cases than the 517 settlements, and that the settlements had stronger cases than the more than 82,000 abuse claims in the bankruptcy.
"The tried cases where the plaintiff was successful are characterized by a clear and obvious institutional failure, the abuse being uncovered and reported to the police soon after it occurred, and with the majority of survivors initiating litigation within a few years of the abuse," Mr. Bates wrote in a report.
According to him, the majority of the 29 plaintiff verdicts involved an institution employee, whereas the majority of the abuse claims in the bankruptcy involved unpaid volunteers.
Mr. Bates also stated that 85 percent of abuse claimants did not report their abuse to the police or scouting.
The Boy Scouts have stated that victims could receive up to $2.7 million for the most heinous abuses, but critics estimate that the highest payout would be no more than $58,000.
In its filing on Tuesday, the Boy Scouts also stated that an investigation is underway to determine whether some of the votes against its reorganization plan were cast improperly.
Another lawyer representing survivors, Jason Amala, said on Tuesday that the group's claim that victims will be paid in full is "absurd," adding that "there isn't enough money to make it work."