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Breaking Down the Law: What does Boy Scouts of America's bankruptcy mean for victims?

LAS VEGAS (KSNV) — Yesterday, the Boy Scouts of America filed for Chapter 11 Bankruptcy protection in Delaware. The bankruptcy comes as a result of hundreds of lawsuits filed against the organization by men claiming to have been victims of sexual abuse while they were minors.

According to the organization, the bankruptcy filing will allow the establishment of a compensation trust for alleged victims rather than fighting individual lawsuits.

What led to the bankruptcy filing and where do things go from here? And why now?

The biggest reason is recent changes in the law by various states, which “revive” the statute of limitations for victims of sexual abuse as a minor.

Last year, we discussed the new law in California extending the statute of limitations for survivors of childhood sexual abuse in California. It gives everyone – regardless of their age – a 3 year “lookback” window to file suit for sexual abuse that occurred when they were a minor.

That 3 year window started January 1, 2020. So, any claim that was previously barred by the statute of limitations is now “revived,” regardless of how long ago the alleged abuse occurred, so long as it was not previously litigated to final judgment.

Eight other states enacted similar “revival” statutes, including New York, New Jersey, Arizona, and others – states with major population centers, So in large part because of these new “revival” statutes, thousands of new cases have come to light against the Boy Scouts, which led to them filing for Bankruptcy protection.

Now that they have filed for Bankruptcy, all pending lawsuits are given an Automatic Stay. Attorneys for the Boy Scouts will file proof in every lawsuit, after which all litigation is paused. Anyone with a lawsuit or who have submitted a claim to the Boy Scouts is now a “creditor” of the Boy Scouts.

The good news for potential victims is that a Chapter 11 filing does not require creditors to file a “proof of claim” in the Bankruptcy court. Instead, the Boy Scouts, the debtor, must file a Schedule of Assets and Liabilities, listing every known victim who has a claim.

If a victim does not see their claim listed or perhaps sees their claim listed but does not agree with the amount listed as the potential liability, they can file a Proof of Claim stating what they believe to be the correct amount owed for their claim.

So, the fact this was filed as a Chapter 11 Bankruptcy, which is a Business Reorganization, is beneficial to potential claimants. If someone has not yet made a claim, they can still do so within their State’s new “lookback window” by filing a Proof of Claim with the Bankruptcy Court.

In the initial filing, the Boy Scouts of America listed over $1 billion in assets, with $500M to $1B in liabilities or potential liabilities.

It would not surprise me if we end up seeing similar filings by other youth organizations because of these new laws. Some of the states passing these new laws, such as California, New York, and New Jersey, have high populations, so there could be a ton of new litigation in in these states against entities like the Catholic church; youth sports programs like USA Swimming, and USA Gymnastics.

There is no “revival” statute or “lookback” window on the books in Nevada. However, the time to bring a civil claim for childhood sexual assault was extended during the 2017 session from 3 years to 20 years from the date a person turns 18 or from the date of “discovering” the injury, which we know often occurs later in life through therapy, since victims of childhood sexual abuse often suppress the memories.

Another significant change from 2019 is the criminal statute of limitations for sexual assault is eliminated if the identity of the perpetrator is established by DNA evidence. So, sexual assault in Nevada now has the same statute of limitations as murder if DNA proves the identity of the assailant.