Erie Boy Scout council to pay $700,000 to settle child sex abuse claims in national bankruptcy

As the Boy Scouts of America's massive bankruptcy case moves closer to a resolution, the Scouts' Erie-area council has determined how much it will contribute to the case's central creation - an $850 million settlement that the Scouts reached with victims of child sexual abuse.

The French Creek Council, based in Summit Township and covering six counties in northwestern Pennsylvania, has agreed to pay $699,673 in cash toward the settlement fund, with no contributions of property, according to the council's executive director and records in U.S. Bankruptcy Court in Delaware, where the BSA filed for Chapter 11 reorganization in February 2020.

The nearly $700,000 will come out of the French Creek Council's unrestricted endowment funds, Duane Havard, the council's executive director, told the Erie Times-News. The council's unrestricted net assets are $2,525,616 out of total net assets of $5,116,861, according to bankruptcy records. The payment of $699,673 is about 14% of the council's total net assets and about 28% of its total unrestricted net assets.

The French Creek Council is one of more than 250 BSA councils nationwide that are contributing a total of $600 million toward the $850 settlement, with the BSA national organization contributing another $250 million.

The BSA has also reached agreements with two other entities to contribute a total $1.037 billion to the overall settlement - $787 million from the Hartford Insurance Company and $250 million from the Church of Jesus Christ of Latter-day Saints. The church, widely known as the Mormon church, had been the largest single sponsor of Scout troops before ending its partnership with the BSA in 2020, according to the Associated Press.

In exchange for the settlement payments, all the contributors, including the local councils, are to be released from liability for the sexual abuse claims. The settlement proceeds are to be placed in a trust and used to compensate about 60,000 abuse survivors who filed more than $90,000 claims in the bankruptcy case.

The claims related to the French Creek Council number 102, according to the most recent bankruptcy records. Earlier records had put the number at 87 and 92. The claims are confidential.

Boy Scouts offer to compensate sexual abuse victims in historic $850 million bankruptcy settlement

Council will also lose interest income

The BSA itemized the expected payments from all the local councils on Sept. 15 in an amended disclosure statement that details the fifth version of the BSA's bankruptcy reorganization plan. The BSA, based in Irving, Texas, filed for bankruptcy to deal with a flood of lawsuits nationwide over claims of abuse over decades. The expansion of statutes of limitations for child sex abuse suits in many states helped spur the filings.

Revisions to the disclosure statement were filed over the past several days. On Tuesday, Judge Laurie Selber Silverstein set Jan. 24 for a hearing to approve the reorganization plan. Silverstein is chief judge for U.S. Bankruptcy Court for the District of Delaware, based in Wilmington.

Several challenges to the plan remain, including from abuse survivors. The local councils' contributions will be final only after the plan is approved. Havard said the board of the French Creek Council has approved the contribution of the $699,673 to the compensation fund for victims.

"We are unsure of the date these funds will be requested at this time," he said an email.

Boy Scouts bankruptcy: How much will Erie council give in settlement with abuse victims?

Havard said the removal of the $699,673 from the council's endowment is expected to lead to a loss of about $35,000 in interest income to the French Creek Council in the year after the contribution is made. The council uses interest income to help fund programs for the approximately 2,000 youths involved in Scouting through the French Creek Council.

"At this time, I do not know what the long-term results will be due to the loss of interest income," Havard said.

The French Creek Council and the other local councils run the day-to-day operations of the BSA but are legally separate from the national organization. As part of the settlement, the local councils could contribute cash or property, though the French Creek Council opted only for the cash contribution.

The council's major property asset is Custaloga Town Scout Reservation, on more than 500 acres in Mercer County. Boy Scouts in northwestern Pennsylvania have camped, hiked and held jamborees at the camp since the 1960s. The Custaloga Town Scout Reservation is in Carlton, Mercer County, located near French Creek at a site where the county lines of Mercer, Crawford and Venango meet.

Custaloga Town scout camp: almost 50 and still vibrant

Varying contributions

Nationwide, the size and scope of the expected payments vary from council to council. According to the AP, the proposed contributions range from $11,492 in cash from the Rocky Mountain council in Colorado to property valued at more $13 million from the Orange County council, in California.

The size of the contributions also vary among the 17 BSA councils in Pennsylvania, according to the bankruptcy records.

* Bucktail Council, based in Dubois: $260,931 in cash.

* Chester County Council: $1,559,680 in cash.

* Chief Cornplanter Council, based in Warren: $260,931 in cash.

* Columbia-Montour Council, based in Bloomsburg: $260,931 in cash.

* Cradle of Liberty Council, based in Wayne, near Valley Forge: $6,806,713 total; $376,313 in cash, $6,430,400 in property.

* French Creek Council, based in Summit Township and includes Erie, Crawford counties: $699,673 in cash.

* Hawk Mountain Council, based in Reading: $1,636,124 in cash.

* Juniata Valley Council, based in Reedsville, southeast of State College: $421,504 in cash.

* Laurel Highlands Council, based in Pittsburgh: $5,972,147 in cash.

* Minsi Trails Council, based in Allentown: $2,580,916 in cash.

* Moraine Trails Council, based in Butler: $1,196,485 total; $204,485 in cash, $992,000 in property.

* New Birth of Freedom Council, based in Mechanicsburg: $2,713,971 in cash.

* Northeastern Pennsylvania Council, based in Moosic, near Scranton: $687,262 in cash.

* Pennsylvania Dutch Council, based in Lancaster: $1,054,371 in cash.

* Susquehanna Council, based in Williamsport: $453,846 in cash.

* Washington Crossing Council, based in Doylestown, Bucks County: $1,390,180 in cash.

* Westmoreland-Fayette Council, based in Greensburg: $1,367,518 total; $1,083,676 in cash, $283,842 in property.

Disputing the amounts

Survivors of abuse have options in how they want to resolve their claims using money from the settlement trust fund.

Survivors who want to resolve their claims immediately can file an expedited distribution and get $3,500, according to the disclosure statement.

For abuse survivors who want to pursue their claims further, the plan proposes the creation of a scaling system. The trustee of the settlement fund would use the scaling system to determine payment based on an evaluation of each abuse claim, including the type and duration of the abuse, among other factors.

As Boy Scouts eye end to bankruptcy, tough work lies ahead in vetting, valuing sexual abuse claims

The system would be similar to the setup that independent administrators for the Catholic Diocese of Erie and other Roman Catholic dioceses statewide used to evaluate claims filed with the dioceses' compensation funds for child sex abuse victims.

Local councils had input in determining the size of their contributions to the settlement trust for the abuse survivors, the BSA said in a statement.

"These figures," according to the statement, "were determined through a combination of information filed in the claims process and what local councils could meaningfully contribute while ensuring Scouting can continue in local communities across the country."

Establishing the councils' contributions, the BSA said in the statement," is a necessary step in the BSA's ongoing efforts to reach a global resolution that will equitably compensate survivors and ensure Scouting's future by resolving past abuse cases for both the national organization and local councils.

"We are committed to working with all local councils to ensure they are able to make the necessary contribution to the Trust while ensuring that the mission of Scouting continues in the many local communities we serve."

The local councils' contributions are facing a challenge from abuse survivors, as is the entire reorganization plan. On Sept. 15, the same day the BSA filed the latest version of its plan, a court-appointed committee of lawyers who represent abuse survivors filed a motion asking that it be allowed to present a reorganization plan of its own.

The lawyers on the committee - called the Tort Claimants' Committee - said the BSA's proposed plan does not contain enough money for survivors. Using "the most optimistic estimates," the committee said in its motion, each survivor would receive an average of $35,000.

"The aggregate settlement amounts in BSA's Fifth Plan may sound like a lot of money, but, in the end, the individual survivors are left short." according to the motion.

Also according to the motion, "The BSA's Fifth Plan includes settlements with Local Councils that leave them with billions of dollars of cash and property in excess of their current need to fulfill their mission of Scouting."

The committee reiterated its position on Thursday, and said it would urge survivors to vote against the plan's approval.

"Survivors should not be fooled that they are going to receive fair compensation under the BSA's ... belated attempt to avoid responsibility for the abuse of tens of thousands of children," lawyer James Stang, of California, said in a statement. "The Tort Claimants' Committee will oppose the Boy Scouts' plan and fight for survivors."

Stang serves as the counsel to the Tort Claimants' Committee. His law firm, Pachulski, Stang, Ziehl, Jones, represents the committee.

The BSA contends that the latest version of the plan serves the best interests of the abuse victims and the national organization and the local councils.

The proposed reorganization plan allows the BSA "to timely and equitably compensate survivors of Abuse in Scouting" and "to ensure that the BSA emerges from bankruptcy with the ability to continue its vital charitable mission," according to the disclosure statement.

"The BSA cares deeply about all survivors of child abuse. The BSA understands that no apology can repair the damage caused by abuse or take away the pain that survivors have endured. The BSA is steadfast in its commitment to continually improve all of its policies to prevent abuse."

Contact Ed Palattella at [email protected]. Follow him on Twitter @ETNpalattella.