A federal judge rejected pleas by opponents of the Boy Scouts of America’s bankruptcy reorganization to block distributions from the $2.4 billion settlement fund for sex-abuse victims created in the youth group’s chapter 11 case, WSJ Pro Bankruptcy reported. Insurance companies and a small group of sex-abuse plaintiffs who had opposed the Boy Scouts’ reorganization plan recently renewed their efforts to block it, seizing on the Supreme Court’s decision to examine a similar plan drawn up by closely held drugmaker Purdue Pharma. U.S. District Judge Richard Andrews in Wilmington, Del., said on Tuesday that, unlike Purdue’s bankruptcy plan, which hasn’t been put into motion, the youth group’s reorganization went into effect five months ago and many of the transactions it contemplates have already happened. Judge Andrews said the Boy Scouts and tens of thousands of sex-abuse victims have relied on the court-approved chapter 11 plan. A pause on the reorganization plan would throw into limbo the overwhelming majority of abuse claimants who support it, he said. The Supreme Court is set to examine on an expedited basis a central feature of both the Purdue and Boy Scouts reorganization plans: whether bankruptcy courts can extinguish legal claims against third parties that aren’t in chapter 11 without the consent of all claimants. Purdue’s plan would release its Sackler family owners from opioid-related liabilities in return for up to $6 billion in settlement payments over time from the family members, who have denied wrongdoing. Similarly, the Boys Scouts’ affiliated councils and partner organizations are being shielded from sex-abuse lawsuits under its chapter 11 plan. The youth group’s plan took effect in April after winning approval from a bankruptcy court last year and surviving an appeal before Judge Andrews in March. The plan is now being appealed to the Court of Appeals for the Third Circuit in Philadelphia.
