Boy Scouts Of America Files For Chapter 11 Bankruptcy Amidst Law Suits

Boy Scouts of America faces 300 lawsuits The scouting organization, Boy Scouts of America, is filing for bankruptcy due to their financial instability as they face 300 lawsuits from...

(Photo Credit: Eric Gay | AP)

Boy Scouts of America faces 300 lawsuits

The scouting organization, Boy Scouts of America, is filing for bankruptcy due to their financial instability as they face 300 lawsuits from former members claiming they were sexually assaulted while scouts. With more high profile sex abuse cases including USA Gymnastics and the Catholic Church, more states are changing their laws to allow a longer statute of limitations, allowing victims more time to seek criminal justice against their perpetrators.

Allowing for a longer statute of limitations has also lead to a higher rate in lawsuits from cases that were previously prevented from going to court due to the previous time limitations. An attorney representing many of the men coming forward with allegations against Boy Scouts of America, Paul Mones says, “For years, organizations like the Boy Scouts counted on these laws protecting them. Now those laws are not there, and the Boy Scouts have fallen under their own weight of these abuse allegations and the potential cases that will be filed.”

Mones makes a point that the potential liability of the Boy Scouts of America can be big, winning a single case in Portland in 2010 in which the judgment against the organization was $20 million. Boy Scouts relied on the insurance they’ve had for years that covers claims of sexual abuse. The insurance companies in recent years have been withdrawing coverage saying that the Boy Scouts knew about the abuse but didn’t disclaim the insurance companies.

This results in the Boy Scouts being responsible to fund any settlements and litigation themselves. According to the most recent tax filing by the Boy Scouts of America, they have a total revenue of more than $285 million and in 2018 reported they own $1.4 billion in assets. The Wall Street Journal reported that as of last month local Boy Scout affiliated nonprofits and councils hold $3.3 billion in assets.

Since December 2018 the organization has been exploring the possibility of bankruptcy and has indicated hiring a law firm for possibly filing for Chapter 11 bankruptcy. The Boy Scouts hope is that they can protect their assets of local councils through filing for bankruptcy, similar to the case of the Catholic Chuch coming forward with claims to protect their parishes and properties.

Attorney Mones says this case can serve as a warning for any organization that hasn’t faced abuse claims, saying that they should be proactive in solving the issue instead of being proactive trying to cover it up. The official Boy Scouts of America YouTube channel features a video explaining why the organization is filing for bankruptcy claiming it’s for the financial restructuring of their organization that won’t affect local groups. They also go onto say that scouting activities will continue stating that they will benefit their non-profit programs by ensuring long-term financial stability.

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