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The Justice Department’s U.S. Trustee Program (USTP) filed on Friday an objection to a debtor company’s proposed candidate for appointment as a Future Claimants’ Representative (FCR) in In Re The Fairbanks Company, No. 18-41768 (Bankr. N.D. Ga.) involving a trust to compensate those suffering from asbestos disease, according to a USTP press release. In its objection, the USTP argued that the court is required to select the best candidate without deference to the debtor or plaintiffs’ lawyers. The objection asserts that the proposed candidate currently serves as FCR for several other trusts and has other connections to trusts that have contained inadequate safeguards against fraudulent claims, inflated professional fees, and other costs that threaten to deplete the trusts and reduce compensation to future claimants. The USTP asked the court to adopt an open selection process that allows candidates without connections to the professionals in the case or other conflicts to be considered. As noted in its brief, “the USTP was created to be the ‘watchdog’ for the bankruptcy system to ensure that cases are not administered for the narrow benefit of the lawyers and other professionals instead of stakeholders such as creditors and employees.”

The Boy Scouts of America is considering filing for bankruptcy in an effort to get a handle on what could be an onslaught of claims over allegations of sexual abuse, WSJ Pro Bankruptcy reported. Despite declining enrollment and legal threats, the national organization lists assets of more than $1.5 billion in its most recent yearly financial report. And that doesn’t even include any assets held by the organization’s more than 250 regional councils. Plaintiffs’ lawyers suing the Boy Scouts questioned whether the organization’s motivation in exploring bankruptcy is financial preservation, given its wealth. Over the past 12 years, Oregon lawyer Peter Janci has sued the Boy Scouts on behalf of about 100 people.

When Mike Isabella filed for chapter 11 bankruptcy in September, the former “Top Chef” star had hoped the company reorganization would stop the financial bleeding and “get me back to where I was” six months earlier, before a former manager accused him and his partners of sexual harassment, the Washington Post reported. He was, in short, fighting for a second chance to win over Washington diners who had helped his restaurant group grow into one of the largest in town. But in a chapter 7 filing on Tuesday, which seeks to operate six restaurants through Dec. 27 before closing them permanently, Isabella argues that the local and national media relentlessly threw shade on his business operations even after he agreed to a confidential settlement in May with former Isabella Eatery manager, Chloe Caras, who sued for “extraordinary sexual harassment.”

The Boy Scouts of America is considering filing for bankruptcy protection as it faces dwindling membership and escalating legal costs related to lawsuits over how it handled allegations of sex abuse, WSJ Pro Bankruptcy reported. Leaders of the Boy Scouts, one of the country’s largest youth organizations, have hired law firm Sidley Austin LLP for assistance with a possible chapter 11 bankruptcy filing. Founded in 1910, the Boy Scouts group says that more than 110 million people have participated in its educational programs, which promote outdoors skills, character-building and leadership. The Boy Scouts have been at the center of sexual-abuse scandals in the past, and the organization is facing a number of lawsuits that allege inappropriate conduct by employees or volunteers in incidents dating back as far as the 1960s. Filing for bankruptcy would stop the litigation and would give the nonprofit a chance to negotiate with those who have sued.

USA Gymnastics’ recent bankruptcy filing put an immediate stop to litigation brought by sexual-abuse victims of Larry Nassar, frustrating some who hoped those lawsuits would provide answers, accountability and closure, the Wall Street Journal reported. But bankruptcy could, in the long run, make it easier for victims to receive compensation. Legal experts say that the process opens the door for more people to file claims, amplifying victims’ voices and giving them more leverage to demand funds. The embattled sports governing body filed for chapter 11 bankruptcy in Indianapolis on Wednesday, as it faced law-enforcement investigations and lawsuits filed by more than 300 women and girls, including former Olympic gymnasts. They said that the organization failed to protect them from Nassar, the U.S. national team’s longtime doctor.

In announcing that the Archdiocese of Santa Fe would seek bankruptcy protection, Archbishop John Wester said that the action would help ensure fair compensation for sex-abuse victims, according to the Albuquerque Journal editorial. His office went on to proclaim in a diocesan letter distributed to the faithful at Mass last Sunday that “for over 25 years, the Archdiocese of Santa Fe has been a leader among its peers in addressing sexual abuse of children by clergy.” Wester is correct on the first point, given the number of potential cases pending and others not yet filed. Victims will be represented and have their days in court. They may do so confidentially if they wish, but in general these proceedings will be public. And bankruptcy protection will allow the Archdiocese to continue to provide valuable services through parishes and schools even as lawyers and the court sort through financial questions like what the Archdiocese’s assets really are and determine the status of assets transferred to parishes by the Archdiocese in recent years, according to the editorial. While the Archdiocese of Santa Fe has taken meaningful steps to stop abuse and to compensate and counsel victims — some 300 claims to date — the archdiocese has been anything but transparent, according to the commentary. It fought tooth and nail to keep court files secret until Judge Alan Malott ordered them opened up last year at the request of KOB-TV. Meanwhile, new disclosures and allegations continue to mount, putting the past conduct of the church under a microscope.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Steven Timmel, the Buffalo Catholic Diocese’s chief financial officer, is resigning, another one of Bishop Richard Malone’s staff members to step down over the past year as the diocese continues to handle its clergy abuse scandal, WBFO.org reported. Villanova Professor Emeritus of Church Management Charles Zech said that few diocese CFOs have faced a situation like this. If the Child Victims Act were to pass in New York, it could ease current statutes of limitations for criminal and civil sex abuse cases. It could take a year for victims to step forward in the legal battle, which could lead to the diocese declaring bankruptcy, another process that would take additional time. Unless settlements are reached separately, Zech said it could take five years before the dust settled.

The governing body for American gymnastics filed for bankruptcy Wednesday, a dramatic step for an embattled organization facing mounting legal and financial challenges stemming from decadeslong sexual abuse by the national team’s former doctor, WSJ Pro Bankruptcy reported. The chapter 11 filing, made by USA Gymnastics in Indianapolis federal court, has far-reaching implications for victims of the former doctor, Larry Nassar, and the U.S. national team, whose governance is in disarray with less than two years to go before the 2020 Tokyo Olympics. The filing puts an automatic stop — perhaps permanently, depending on a judge’s ruling — to depositions and discovery in lawsuits filed by Nassar’s victims. It also could disrupt formal efforts to revoke USA Gymnastics’ status as the sport’s official governing body, a process the U.S. Olympic Committee initiated last month.

New Mexico's largest Catholic diocese has spent hundreds of thousands of dollars in recent months on lawyers to fight claims of clergy sex abuse and to prepare for a potentially lengthy battle in bankruptcy court, the Associated Press reported. The Archdiocese of Santa Fe's petition for reorganization provides a rare look into the finances of a religious organization that for decades has been wrestling with the financial and social consequences of a scandal that rocked churches across the country. National watchdog groups and attorneys for victims point to the money spent by the archdiocese on lawyers over the last three months and the tens of millions of dollars in real estate that has been transferred to parishes in recent years, effectively reducing the amount of assets held by the archdiocese. About 20 dioceses and other religious orders around the U.S. have filed for bankruptcy protection as a result of clergy sex abuse claims, and victims' advocates say that there are trends, including the shifting of assets to other funds or parishes, a tactic that has been used in dioceses in Minnesota, Wisconsin, Tennessee and Southern California.

The largest Catholic diocese in New Mexico has filed its bankruptcy petition in federal court, beginning a reorganization process that could take more than a year, the Associated Press reported. Attorney Ford Elsaesser, who is representing the Archdiocese of Santa Fe, confirmed the filing was made yesterday. The move comes as the archdiocese faces more than three dozen active cases involving clergy sex abuse. Archbishop John Wester announced last week that he had been contemplating chapter 11 for years but that the archdiocese had reached a tipping point. Expecting more cases to be filed, he said he wanted to ensure there would be resources to provide compensation for victims.