Boy Scouts bankruptcy judge bemoans 'staggering' legal fees
3/17/21 REUTERS LEGAL 21:02:54
Copyright (c) 2021 Thomson Reuters
Maria Chutchian
REUTERS LEGAL
March 17, 2021
A member of Boy Scouts of America wearing a protective mask salutes at a ceremony for Veterans who are unable to give military honors during Memorial Day following the outbreak of the coronavirus disease (COVID-19) in the Staten Island borough of New York U.S., May 25, 2020. REUTERS/Jeenah Moon TPX IMAGES OF THE DAY
(Reuters) - The judge overseeing the Boy Scouts of America's bankruptcy has urged lawyers involved in the Chapter 11 case to resolve the remaining roadblocks to the youth organization's emergence from bankruptcy and compensation of sex abuse survivors as soon as possible, decrying the growing legal fees that the group has incurred.
U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware made her comments during a remote hearing on Wednesday in which the Boy Scouts' lawyers at White & Case reiterated the need for the organization to exit Chapter 11 by the end of the summer because funds are running low. Jessica Lauria of White & Case told Silverstein that the Boy Scouts have racked up nearly $100 million in professional fees since the bankruptcy began in February 2020, a figure that will likely reach $150 million by August, Lauria said.
The Boy Scouts filed for bankruptcy in the face of nearly 300 lawsuits accusing troop leaders of sexual abuse spanning decades. But with insurers and groups representing sex abuse survivors continuing to battle each other over a variety of matters, and both opposed to the Boy Scouts' proposed reorganization plan, the organization still has a long way to go before it is able to wrap up its bankruptcy. Several lawyers have noted that if the organization is not able to reach consensus on how to compensate survivors in the coming months, the organization may not survive.
"We're $100 million into fees in this case. I think that is a staggering number," Silverstein said. "And progress needs to be made. Victims need to be compensated appropriately and the Boy Scouts' mission needs to continue."
The ability of the organization to continue should be a key element of ongoing settlement talks and the timeline for the bankruptcy proceedings, she added.
"It affects how much this is going to cost and quite frankly, every dollar going to professional fees is a dollar that comes out of some creditor's pocket," the judge said.
The Boy Scouts announced a plan to set up a settlement trust for sexual assault survivors that would be funded through a mix of cash, artwork, certain oil and gas interests and insurance policies. The plan also calls for local councils to contribute a combined $300 million. The organization, which estimates the sex abuse claims filed to number around 85,000, is still in mediation with insurers, survivor groups and other creditors, to build support for its proposal.
The official committee representing survivors, represented by Pachulski Stang Ziehl & Jones, has said the settlement offer is insufficient. The committee has also argued that local councils should be able to contribute much more than $300 million, which some councils have disputed. The insurers, on the other hand, are worried about what they say are invalid and fraudulent claims.
The insurers have moved to investigate claims they suspect are invalid. Silverstein said during Wednesday's hearing that she is inclined to grant parts of the insurers' requests but is holding off on issuing a formal decision.
Meanwhile, survivor groups and a future claims representative filed a motion on Tuesday seeking the estimation of the total value of the 85,000 claims.
Ahead of Wednesday's hearing, the Boy Scouts reached a deal with survivor groups extending bankruptcy court protection for local councils against pending sex abuse lawsuits.
The case is In re Boy Scouts of America, U.S. Bankruptcy Court, District of Delaware, No. 20-10343.
For the Boy Scouts: Jessica Lauria, Michael Andolina, Matthew Linder, Laura Baccash and Blair Warner of White & Case and Derek Abbott, Andrew Remming, Eric Moats and Paige Topper of Morris, Nichols, Arsht & Tunnell
For the insurers: Tancred Schiavoni, Gary Svirsky and Andrew Kirschenbaum of O'Melveny & Myers; Stamatios Stamoulis of Stamoulis & Weinblatt; James Ruggeri, Joshua Weinberg and Michele Backus Konigsberg of Shipman & Goodwin; Philip Anker, Danielle Spinelli and Joel Millar of Wilmer Cutler Pickering Hale and Dorr; and Erin Fay and Gregory Flasser of Bayard
For the official tort claimants' committee: James Stang, Iain Nasatir, John Morris, James O'Neill and John Lucas of Pachulski Stang Ziehl & Jones
For the Coalition of Abused Scouts: David Molton, Sunni Beville, Eric Goodman and Tristan Axelrod of Brown Rudnick; Lawrence Robbins, Ariel Lavinbuk, William Trunk and Joshua Bolian of Robbins Russell Englert Orseck Untereiner & Sauber; and Rachel Mersky of Monzack Mersky Browder and Hochman
For the future claims rep: Robert Brady, Edwin Harron and Sharon Zieg of Young Conaway Stargatt & Taylor
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