A group of Boy Scouts of America (BSA) abuse survivors has asked the U.S. Supreme Court to review the organization’s $2.46 billion bankruptcy settlement, arguing that the plan unlawfully prevents them from pursuing separate lawsuits against third parties such as local councils and sponsoring churches.
Survivors Seek Their “Day in Court”
The petitioners, described as a small group of holdout survivors, contend that the bankruptcy plan unfairly shields non-debtor entities that were not themselves in bankruptcy from direct civil liability. Under the confirmed plan, these entities, including local Boy Scout councils and faith-based organizations that chartered troops, would receive broad releases from future abuse claims in exchange for their financial contributions to the settlement trust.
The survivors argue that this setup violates their constitutional rights to due process and denies them the opportunity to have their individual cases heard in court. In their filing, they assert that the deal “forces survivors to accept compensation through a centralized trust” instead of allowing them to pursue full accountability from all responsible parties.
A Legal Challenge With National Implications
If the Supreme Court agrees to hear the case, it could have far-reaching consequences for the use of so-called non-debtor releases in mass-tort bankruptcies, a mechanism that has become increasingly common in large-scale settlements involving sexual abuse and product-liability claims.
Lower courts have split on whether bankruptcy judges have the authority to discharge claims against parties that never filed for bankruptcy themselves. The Boy Scouts case now joins a growing list of controversial reorganizations, including those involving Purdue Pharma and Johnson & Johnson’s talc subsidiary, where similar questions about fairness and scope of release have been raised.
The $2.46 Billion Plan Under Scrutiny
The Boy Scouts’ reorganization plan, approved in 2023, created one of the largest sexual-abuse compensation funds in U.S. history, intended to resolve claims from more than 80,000 survivors. Supporters argue that it provides meaningful compensation while allowing the organization to continue its operations and deliver restitution efficiently.
Critics, however, maintain that it lets powerful institutions escape deeper accountability, transferring liability to a bankruptcy trust and diluting individual survivors’ rights to jury trials. They also note disparities in potential payouts depending on factors like state statutes of limitations and the severity of abuse.
A Critical Test for Bankruptcy Justice
The Supreme Court’s decision on whether to take the case could determine how far bankruptcy protections can extend to shield non-debtor entities. For survivors and advocates, it represents a critical test of whether the legal system will prioritize collective settlement efficiency or uphold the individual right to seek justice in open court.
Until the Court decides whether to hear the appeal, the $2.46 billion settlement remains in effect, but the challenge underscores that, even years after the Boy Scouts filed for bankruptcy, the fight for accountability and fair process is far from over.
Blue Sky Legal is leading the conversation on the Instituational abuse settlement, highlighting the need for accountability, transparency, and justice in large-scale bankruptcy cases.
