COURT SIDES WITH ABUSE SURVIVORS IN BSA FIGHT
May 19, 2025
THIRD CIRCUIT DELIVERS BIG WIN FOR SEXUAL ABUSE SURVIVORS IN BOY SCOUTS OF AMERICA BANKRUPTCY CASE
On May 14, 2025, the United States Court of Appeals for the Third Circuit issued a decision affirming the Confirmed Plan of Reorganization (Plan) in the Boy Scouts of America (BSA) bankruptcy. See In re: Boy Scouts of America, No. 23-1664 (3d. Cir. May 13, 2025). This decision is an extremely positive outcome for the brave sexual abuse survivors ASK LLP represents in this case. The ruling brings the survivors one step closer to receiving much larger settlement distributions, bolstered by inclusion of the Chubb and Hartford settlement.
THE THIRD CIRCUIT’S DECISION
In this complex bankruptcy appeal various groups challenged parts of the BSA bankruptcy plan that settled decades of sexual abuse claims. To delve deeper into the specifics of the ruling and the legal arguments presented, the full decision is available for your review here. Here’s a plain English breakdown of what it means:
BSA Filed for bankruptcy to settle tens of thousands of sexual abuse claims
A Settlement trust was created, funded primarily by insurance company contributions
Part of the plan included non-debtor releases, which prevented people from suing certain third parties, including the insurance companies who were not in bankruptcy themselves.
Three groups appealed Survivors (144 out of 82,000 claimants) argued that the non-debtor releases in the plan were illegal based on the recent Supreme Court case Harrington v Purdue Pharma, which ruled such releases unenforceable.
The Third Circuit Court rejected their appeal as statutorily moot as the insurance policies had been sold back to the debtors as part of the Plan and under established bankruptcy law the sale could not be undone after the Plan was confirmed.
Certain insurers wanted the court to clarify that they still had their same legal defenses even after the bankruptcy. The Court considered their appeal not moot, but found the existing plan was legally sound and proposed in good faith. No changes were required–except for one technical clarification.
Next Steps
Appellants have 14 days from the date of the decision to request a rehearing before the Third Circuit En Banc, Fed. R. App. P. Rule 40., and assuming no en banc rehearing is granted, 90 days to file a writ of certiorari to SCOTUS, Supreme Court Rule 13.1. Both courts have discretion whether to take the case. See “Judges Bill of 1925,” 43 Stat. 936; Fed. R. App. P. Rules 35, 40; Third Circuit LAR 35; Third Circuit IOP Chap. 9.
Why does this decision matter?
This decision is important because it will help ASK’s survivor clients receive larger settlements for two reasons: Chubb and Hartford settlement money and the Trustee’s litigation recovery against non-settling insurers are closer to being realized.
Hard-fought negotiations by the Coalition—of which ASK is a founding member— resulted in Chubb, The Hartford and other settling insurers agreeing to buy back insurance policies from BSA for more than $1.6 billion. The Trustee will eventually distribute that $1.6 billion to claimants. However, the Trustee is not authorized to disburse those funds until the Plan is final. The Plan will not be final until all potential appeals are resolved. However, since the remaining appeals are entirely discretionary and given the thoroughness of the Third Circuits’ decision it is unlikely that they will be granted. Thus, we hope that by the end of the year the Settlement Trust will begin full distributions to our survivor clients.
