The Boy Scouts of America has a pathway out of bankruptcy, but the group faces challenges in repairing its finances and reputation after resolving a legacy of sexual abuse, WSJ Pro Bankruptcy reported. A bankruptcy court last week approved most parts of a landmark compensation plan of at least $2.5 billion that would end the Boy Scouts’ chapter 11 case and resolve roughly 82,200 individual claims of sexual abuse. An exit from chapter 11 would shield the Boy Scouts from further sex-abuse lawsuits, while testing whether it can still appeal to families despite its past failures to protect children. The chapter 11 case was the largest and most complex bankruptcy case filed to resolve mass claims of sexual abuse. Adult survivors wrote hundreds of letters to the bankruptcy court, recounting lives twisted by childhood abuse and detailing their views of the proceedings. News of the courtroom battles between the Boy Scouts and abuse survivors filtered down to scouting communities and families, fueling doubts about the organization as it tried to hammer out settlements that would ensure its survival. Now the group is close to emerging from bankruptcy, low on cash but retaining much of its prized property holdings and adventure camps. The group is hoping for a chance to start fresh, but faces longer-term challenges from declining membership. “The Boy Scouts can earn back trust and respect over time, but this change won’t be easy and will likely need to be measured in decades,” said Michael Bellavia, chief executive of HelpGood, a Los Angeles marketing agency focused on social impact. The chapter 11 plan keeps the Boy Scouts’ roughly 250 affiliated local councils safe from future sex-abuse lawsuits, and protects recruiting pipelines from civil and religious partner groups. The organization’s national governing body based in Irving, Texas, and local councils across the country are together contributing roughly $800 million. Contributions from insurance companies and troop sponsors bring the total victim compensation to more than $2.5 billion. An earlier total was roughly $2.7 billion but Judge Laurie Selber Silverstein struck down a $250 million settlement with the Church of Jesus Christ of Latter-day Saints, declining to grant the institution the releases that would shield it from further sex-abuse lawsuits.
