What's Happening?
The U.S. Supreme Court has declined to review a $2.4 billion bankruptcy settlement for the Boy Scouts of America, leaving in place a lower court's decision that shields the organization from further lawsuits by childhood sex-abuse victims. The settlement,
approved by a federal bankruptcy court in Delaware in 2022, was challenged by a group of 75 victims who argued that it unlawfully blocked them from suing local scouting programs and third-party organizations. These third-party groups, which include churches and civic organizations, contributed billions to a settlement trust for victims and are protected from future civil lawsuits under the agreement. The Supreme Court's decision not to intervene follows a similar case involving Purdue Pharma, where a bankruptcy agreement was rejected.
Why It's Important?
The Supreme Court's decision has significant implications for the Boy Scouts of America and the broader legal landscape of bankruptcy settlements involving third-party protections. By upholding the settlement, the court has effectively allowed the Boy Scouts to continue its reorganization efforts and emerge from bankruptcy, providing a pathway for compensating victims. However, the decision also raises concerns about the fairness of shielding third-party organizations from lawsuits, potentially limiting victims' avenues for seeking justice. This case could influence future bankruptcy proceedings involving large organizations facing mass tort claims, affecting how settlements are structured and the extent of legal protections for third parties.
