%1

The official committee representing child sex abuse victims in the Boy Scouts of America bankruptcy is asking a judge for permission to file its own reorganization plan, saying the plan proposed by the BSA falls woefully short of fairly compensating abuse victims while shielding local Boy Scouts councils and sponsoring organizations from liability, the Associated Press reported. The official tort claimants committee filed a motion late last week objecting to the BSA’s request for the court to extend the period in which the Boy Scouts have exclusive rights to file and solicit votes on a reorganization plan. The BSA’s plan proposes a $300 million contribution by local councils to a fund for victims, about $115 million in cash and noninsurance assets from the BSA, and the assignment of BSA and local council insurance policies. In return, the 253 local councils and thousands of sponsoring organizations would be released from further liability. The committee noted in its court filing that it had made a settlement offer to the Boy Scouts estimating the value of the roughly 84,000 sexual abuse claims filed in the bankruptcy at about $103 billion, adding that those estimates were “extremely conservative.” The committee noted that its estimate counts each claim as a single act of abuse, even though a substantial number of victims were abused repeatedly and in different ways over several years. The committee also noted that its average claim value of $811,215 is less than the average of $1.2 million per claim that the University of Southern California agreed to pay last month in an $852 million settlement with more than 700 women who accused the college’s longtime campus gynecologist of sexual abuse.

Law firm White & Case LLP will stay in charge of a $14 billion bankruptcy lawsuit against Argentina’s YPF SA, a judge said, rejecting complaints that a lawyer’s career move had undermined the state oil giant’s defense, WSJ Pro Bankruptcy reported. The ruling said that YPF failed to show why White & Case should be ousted as counsel to the bankruptcy trust that has sued YPF in the litigation, which seeks to hold the Argentine oil company responsible for the costs of cleaning up New Jersey’s contaminated Passaic River. Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., issued the ruling Tuesday. Judge Sontchi said that White & Case had erected sufficient safeguards after hiring Jessica Lauria, a former top legal strategist to YPF, in October 2020. Ethical and law firm procedures will protect against disclosure of information that could be used against YPF, he found. Even though Ms. Lauria is no longer involved in the Passaic River litigation, YPF feared inadvertent disclosures of its confidential information.

Pacific Gas & Electric, the troubled utility that has started some of California’s most destructive wildfires, faces new criminal charges for its role in igniting a 2019 wildfire that burned 120 square miles in Sonoma County north of San Francisco, the New York Times reported. The county’s district attorney on Tuesday charged PG&E, which emerged from bankruptcy protection last year, with five felonies and 28 misdemeanors, including recklessly causing a fire with great bodily injury, in connection with the Kincade Fire. The blaze damaged or destroyed more than 400 buildings and seriously injured six firefighters. This is the third set of criminal charges filed against PG&E, California’s largest utility. A jury in 2017 convicted PG&E of charges related to five deaths in a gas pipeline explosion seven years earlier. And the utility pleaded guilty last year to 84 counts of involuntary manslaughter in connection with the 2018 Camp Fire, which was started by its equipment. That fire destroyed the town of Paradise and helped drive PG&E into bankruptcy, where it worked to resolve an estimated $30 billion in wildfire liabilities.

Wayne LaPierre, the top executive of the National Rifle Association, put the gun rights group into bankruptcy to avoid facing a financial investigation by New York’s Attorney General, a lawyer for the state said at the start of a trial that could reshape one of the most politically powerful organizations in the U.S., Bloomberg News reported. New York’s top law enforcement officer, Letitia James, is asking a federal bankruptcy judge in Dallas to either appoint a trustee to run the NRA instead of LaPierre, or to throw out its bankruptcy case, which would make it easier for her to seize the group’s assets if she prevails in a New York lawsuit. “LaPierre’s only goal is to cling to the power that his position holds,” Assistant Attorney General Monica Connell told the judge on Monday during the first day of the trial, which is being held by video. James filed a lawsuit against LaPierre and the NRA in August after investigating alleged financial misdeeds by the organization’s top executives. The suit seeks to dissolve the NRA and redistribute its $200 million worth of assets to other nonprofits. NRA attorney Greg Garman defended LaPierre, calling his fundraising prowess irreplaceable. Throwing out the bankruptcy would wrongly expose the NRA to a politically motivated attack on the group’s First Amendment rights, Garman said. And replacing LaPierre would pose an immediate danger to the organization’s future, Garman told U.S. Bankruptcy Judge Harlin D. Hale. “A trustee is in fact a death sentence,” Garman said, because LaPierre raises $100 million annually for the 150-year-old organization. Judge Hale isn’t expected to rule until after the multiday trial ends. Both sides will focus on the results of James’s investigation, which concluded the NRA executives illegally diverted tens of millions of dollars away from the group’s charitable mission.

Victims of childhood sexual abuse are challenging the Boy Scouts of America for control of the youth group’s multibillion-dollar bankruptcy case, saying they can save scouting’s future while compensating those who have suffered from its history of abuse, WSJ Pro Bankruptcy reported. An official committee representing sex-abuse victims said that because the Boy Scouts have been unable to come up with a viable settlement offer, victims themselves should be able to float a competing chapter 11 plan. “The committee filed this motion because abuse survivors are not fairly treated under the Boy Scouts proposed plan,” said James Stang, lawyer for the committee. The Boy Scouts have said they need to exit chapter 11 by the end of the summer for financial reasons, but don’t have the support of victims’ groups, which have largely rejected an opening settlement offer. “We wholeheartedly share the official tort claimants’ committee’s determination and commitment to equitably compensate survivors,” the Boy Scouts said in a statement. The committee’s challenge to extended exclusivity for the Boy Scouts amounts to a nuclear option in bankruptcy court that, if approved, could take the chapter 11 case in a radically different direction. In court papers filed on Thursday, the committee sharpened its criticism of the Boy Scouts plan as legally flawed and financially insufficient for the nearly 84,000 men who have stepped forward seeking compensation. To settle with victims, the organization last month offered to furnish cash, artwork and other assets, plus the rights to insurance policies dating back to 1935. The Boy Scouts also said they would seek $300 million for victims from hundreds of affiliated local councils spread across the country, which aren’t themselves in bankruptcy but are seeking to participate in a broad victim settlement through the chapter 11 proceeding.

The National Rifle Association rolled the dice by filing for chapter 11 protection earlier this year, gambling that it could use the power of U.S. bankruptcy law to consolidate litigation and combat allegations of fraud and mismanagement brought by the New York attorney general, WSJ Pro Bankruptcy reported. The gun-rights group is about to find out how well that bet is playing out. A federal bankruptcy judge in Dallas has scheduled six days of virtual hearings starting today that are likely to determine the course of the bankruptcy and, potentially, of the NRA itself. Among those whose fates are on the line is Wayne LaPierre, the chief executive who has led the not-for-profit group for three decades and become the public face of one of America’s most powerful advocacy organizations. LaPierre and other top NRA officials are poised to testify in public for the first time on allegations of spending abuses at the group. New York’s attorney general is expected to call other witnesses, possibly including LaPierre’s longtime travel consultant, who arranged NRA-funded private jet flights for him and his relatives, and sat for a deposition last week. “The legal issues here have nothing to do with the Second Amendment — the NRA could be selling shoes,” Adam Levitin, a bankruptcy-law professor at Georgetown University, noted. “This is about whether a major charitable organization has been looted by its managers.” There are four possible outcomes to the hearings, bankruptcy specialists said. U.S. Bankruptcy Judge Harlin Hale could simply allow the NRA bankruptcy to continue rolling along. He could dismiss the case altogether. Or he could leave it in place, but appoint either an independent trustee or an examiner to probe the fraud allegations.