The judge overseeing the Boy Scouts of America’s bankruptcy said law firm Sidley Austin LLP can hold on to the job of advising the youth organization over the protests of a former client that is one of the Boys Scouts’ liability insurers, WSJ Pro Bankruptcy reported. The decision from Bankruptcy Judge Laurie Selber Silverstein marks a victory for Sidley and the Boy Scouts, which argued that forcing them to hire new bankruptcy advisers would unsettle their efforts to restructure. The dispute stems from Sidley’s years representing Century Indemnity Co., an insurer that wrote policies covering liability claims against the Boy Scouts. The Boy Scouts hired Sidley in the fall of 2018, seeking advice on how to deal with hundreds of claims of sexual abuse of children at the hands of Scout volunteers. Sidley dropped Century as a client shortly before it guided the Boy Scouts into chapter 11 protection in February. A subsidiary of Chubb, Century protested the law firm’s request to steer the bankruptcy, accusing Sidley of a conflict of interest. The Boy Scouts are counting on insurers including Century to put up money to cover sexual-abuse claims, putting them at odds with the organization. With many American companies considering chapter 11 as a refuge to endure the coronavirus pandemic, law firms are staffing up their restructuring practices. Friday’s ruling concerns the road map for large firms like Sidley that have multiple areas of practice and large client rosters to steer around conflict rules when advising troubled companies. Judge Silverstein said that Sidley’s decision in January to cut ties with its insurance company client kept the law firm in line with bankruptcy rules on conflicts of interest. “Chubb contends that my approval of Sidley’s retention will encourage law firms to impermissibly drop clients in order to take on more lucrative bankruptcy work,” Judge Silverstein said, adding that she didn’t believe that would happen.
