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Bankruptcy Law Blog

Monday, April 20, 2020

Boy Scouts Declare Bankruptcy

2020 is the centennial anniversary of the Mobile Area Council of the Boy Scouts of America. Celebrations are planned for the entire year, assuming the COVID-19 crisis passes, but could this be the last year of scouting in our area? Earlier this year, the Boy Scouts of America declared bankruptcy.

Why Did BSA Declare Bankruptcy?

The Boy Scouts of America (BSA) are in trouble. Their membership has been declining for years. They have tried to bolster their numbers by opening the organization up to girls, but that was not a popular move.

Then, they decided to explicitly allow LGBTQ scouts and volunteers. In the past, they had excluded openly LGBTQ members and employees in a misguided effort to protect scouts from abuse. This move caused the Mormon church to pull its support for the organization. A significant number of scouts have dropped out of BSA, and joined a competing organization started by the Mormon church.

The BSA’s biggest problem, however, is that it is being sued by countless victims who were sexually abused at the hands of its volunteers and employees. There is no telling how much money the organization would end up owing if each of these cases were tried to a verdict. It is sickening how many children were harmed as the organization looked the other way.

What Does Bankruptcy Mean for the BSA?

In filing for bankruptcy, BSA is doing what many businesses and organizations do when they are facing substantial, but unknown liability. The bankruptcy courts will streamline and oversee the claims process so victims can be compensated from a defined pot of money that the BSA sets aside for that purpose. Going through the bankruptcy court’s claims process will be the only way victims can seek compensation.

It is unclear if assets owned by the Mobile Area Council will be pulled into the bankruptcy, or if our local scouts will feel any bankruptcy consequences at all.

Theoretically, the BSA could cease to exist post-bankruptcy. What is far more likely is that the organization will do some soul-searching and serious reorganization, but will be able to move forward and continue operating. Bankruptcy will give the BSA a second chance.

Don’t Squander Your Second Chance

We wanted to share this information about the Boy Scouts Bankruptcy for a few different reasons.

First, we hope all the victims out there are hearing about the bankruptcy, and are preparing to come forward and seek compensation. The abuse that so many children endured is unconscionable, and all of the victims deserve compensation. As we mentioned above, the bankruptcy case will be the only opportunity for victims to seek compensation.

Second, we think this case is an important reminder of the healing power of bankruptcy. Thanks to the bankruptcy, victims are going to have a quick and easy way to seek compensation. And the organization is going to have a second chance to take the good parts of its legacy and build anew, even though it made terrible mistakes that lead to its current situation.

vThe bankruptcy laws don’t discriminate. No matter how a person or organization got into the financial hole they are in, the bankruptcy laws will help them climb out. If you are considering filing for bankruptcy, the attorneys at Padgett and Robertson are here to help. Please contact our office today to schedule a free initial consultation.

 


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”