Boy Scouts, facing sexual abuse lawsuits, may declare bankruptcy

By Kate Gibson

/ MoneyWatch

The Boy Scouts of America is exploring a range of options to address it's increasingly shaky financial situation. Those may include declaring bankruptcy, with the more than century-old organization facing rising legal fees due to lawsuits over its handling of sexual abuse allegations.

In a Dec. 12 letter to employees released by the nonprofit organization, Mike Surbaugh, its chief scout executive, said the nonprofit is "working with experts to explore all options available" to keep the organization's local and national programs running.

The Boy Scouts has hired law firm Sidley Austin to explore a potential chapter 11 bankruptcy filing, according to The Wall Street Journal. Seeking protection from its debts would stop multiple lawsuits over alleged sexual abuse by Boy Scout workers and volunteers going back decades, while giving the organization space to negotiate with those who sued, according to the newspaper.

The Boy Scouts have a responsibility to "fairly compensate victims who suffered abuse during their time in scouting," wrote Surbaugh, who added the scouts never knowingly allowed a sexual predator to work with youth.

"We have always taken care of victims – we believe them, we believe in fairly compensating them and we have paid for unlimited counseling, by a provider of their choice, regardless of the amount of time that has passed since an instance of abuse," he wrote.

The group's latest annual report describes the scout's future finances as partly dependent on how litigation related to sex-abuses cases is resolved and any damages are awarded. In the filing, Boy Scout officials said they were "aware of threatened and expanding litigation of a similar nature."

Boy Scouts of America: Girls now admitted

In addition to its growing legal costs, the scouts have seen their membership dwindle in recent years to 2.3 million youth members, down from 2.4 million in 2014. Seeking to expand its membership, the Boy Scouts moved last year to start admitting girls. The Mormon Church in May said it would cut ties with the Boy Scouts after clashes over moves including the inclusion of openly gay troop leaders.

Other institutions facing multifaceted sexual abuse scandals have sought bankruptcy protection recently. USA Gymnastics last week filed for bankruptcy as the governing body for the sport deals with the legal fallout from decades-long sexual abuse by Larry Nassar, the national team's former physician. And about 20 Roman Catholic dioceses and other religious orders around the U.S. have previously filed for bankruptcy protection as a result of clergy sexual abuse claims.

Paul Mones, a lawyer who has handled many sex-abuse lawsuits targeting the Boy Scouts, said the organization has assets of more than $1 billion, according to the Associated Press. He was co-counsel in a 2010 sexual abuse case in Portland, Oregon, that led to a nearly $20 million judgment against the organization on behalf of a man molested by a Scout leader in the 1980s.

— The Associated Press contributed to this report

First published on December 13, 2018

© 2018 CBS Interactive Inc.. All Rights Reserved.

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