The Boy Scouts of America has filed for bankruptcy protection.
Facing mounting legal costs from defending itself against lawsuits alleging sexual abuse of boys, the venerable nonprofit sought Chapter 11 protection in a court filing early Tuesday.
A spokesman for the Boy Scouts of America said in a statement that the filing had "two key objectives: equitably compensate victims who were harmed during their time in Scouting and continue carrying out its mission for years to come. The BSA intends to use the Chapter 11 process to create a Victims Compensation Trust that would provide equitable compensation to victims."
The Boy Scouts said that only the national organization had filed for Chapter 11 and that local councils that provide programming and other services are financially independent.
"The BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in Scouting. We are outraged that there have been times when individuals took advantage of our programs to harm innocent children," Roger Mosby, BSA's president and chief executive officer, said in a statement Tuesday.
"While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process — with the proposed Trust structure — will provide equitable compensation to all victims while maintaining the BSA's important mission," he said.
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Michael Pfau, whose Seattle-based law firm, Pfau, Cochran, Veretis and Amala, represents close to 300 people who say they were abused as Scouts in 30-plus states, called the filing historic.
"It will be far larger in terms of the numbers of victims and far more complicated than any of the bankruptcies we've seen so far involving the Catholic Church," Pfau said.
Those bankruptcies involved individual dioceses or archdioceses, Pfau said, while "this involves victims from all 50 states and several U.S. territories."
"You're looking at thousands of abuse survivors making claims," he said. "This is much bigger than the bankruptcy filings involving the Catholic Church."
In December 2018, the BSA telegraphed that it might seek this remedy when it hired the law firm Sidley Austin LLP and announced that it was "working with experts to explore all options available to ensure that the local and national programming of the Boy Scouts of America continues uninterrupted."
Now that the Texas-based organization has filed for bankruptcy protection, the U.S. Trustees Office will pick a creditors committee that will include a number of abuse victims, Pfau said. The committee, in turn, will hire a bankruptcy law firm that will represent the interests of creditors in negotiations with the BSA.
The various abuse cases against the BSA that have been filed in state courts will be halted and transferred to federal bankruptcy court for adjudication, Pfau said.
For the abuse victims, the BSA's bankruptcy filing has pros and cons, Pfau said.
"The pro is that is a far shorter process than going through a trial and the appeals process in state court," he said. "The bankruptcy procedure will probably take anywhere from 18 months to two years from start to finish.
"But the cons are significant," Pfau added. "Each individual loses his opportunity for a jury trial in state court, which is really the most powerful weapon an abuse victim has. One of the primary reasons the BSA filed for bankruptcy is to avoid jury trials."
"Juries don't like fact patterns where children are abused by trusted leaders," Pfau said. "An entity like the Boy Scouts has to consider their exposure."
Like the Catholic Church, the Boy Scouts "have a horrible, sordid history of child abuse in the ranks," Pfau said. "They fought very, very aggressively to keep the extent of the abuse from the public. Now they're facing a wave of legislative reform that is sweeping across the country, with states revising their statutes of limitations to allow victims to sue."
So for the BSA, seeking bankruptcy protection is really the only option if it hopes to survive.
"It's a real day of reckoning for the Boy Scouts," Pfau said.
The organization said Tuesday that Scouting is safer than it's ever been, saying "approximately 90% of pending and asserted abuse claims against the BSA relate to abuse that occurred more than 30 years ago."
Founded in 1910 and long considered a bastion of traditional values, the BSA reported in 2016 that it has more than 1.26 million Cub Scouts, nearly 830,000 Boy Scouts and about 960,000 adult volunteers.