The Boy Scouts of America are taking a page out of the Catholic bishops’ playbook as they file for federal bankruptcy facing down hundreds of lawsuits and thousands of claims alleging child sex abuse. They invoke federal Chapter 11 bankruptcy to protect their “estate” from “creditors.” To put it mildly, the bankruptcy system was not crafted to humanely deal with these victims as we have seen in many diocesan bankruptcies, as well as USA Gymnastics’ recent proposal to pay victims but immunize the U.S. Olympic Committee from liability for abuse claims.
Here is what happens in the typical child sex abuse case, sans bankruptcy: Assuming the statute of limitations is not a barrier, the victim files against those who caused the abuse, often institution and perpetrators alike. The law levels the playing field, empowering the victim to demand the truth and compensation. The system grants the victim the right to obtain discovery and learn the truth. Files and evidence have to be produced by the institution, whose leaders (and insurers) would typically eat lightbulbs before releasing damning documents. The victim is vindicated, and the public educated.
Here is what happens when an organization turns sex abuse victims into creditors. The victim is now one of many, and the focus shifts from the facts of each tragic case to the “estate,” or finances and holdings of the institution. Chapter 11 bankruptcies are intended to let the entity pool its assets in the face of creditors, pay off what they can, and then reorganize. It’s all about saving the institution and “dealing” with creditors — numbers, accounting, and bottom lines. In other words, it’s all about the organization. It is not good redress for those who were sexually abused because often the organization ignored signs of danger and let these children be attacked.
Bankruptcy judges do not typically deal with child sex abuse victims. A bankruptcy case is not about abuse, or the patterns of cover up. The victims’ stories get compressed, and so are typically marginalized once again. Chapter 11, therefore, can be a refuge for institutions (and their insurers) seeking to blunt the movement to validate the victims of sex abuse who have been manipulated into silence by self-interested organizations and then cruelly excluded from the justice system by unfairly short statutes of limitations.
One of the first things to happen will be the setting of a “bar date," by which creditors must come forward if they want to be part of the first wave of settlements. This is a mechanism created for efficiency, and beloved by abuse-fostering institutions, because it forces many victims to come forward whether they are ready or not. These victims often struggle with PTSD, depression, suicidal ideation, and many other illnesses. A system that respects victims lets them come forward when they are ready.
The bankruptcy judge has broad latitude over the scope of discovery, and whether the victims will have individual voices. One can only hope that the judge follows the example set in the Michigan courtroom where the victims of USA Gymnastics and Larry Nassar were permitted to speak in open court, and on the airwaves, with victim impact statements during Nassar’s criminal sentencing. That was one of the most important moments of public service in recent history. It would be a crime for the public to be denied the truth about what happened to young boys who entered scouting with enthusiasm, only to be trapped by abusers in situations where they could not defend themselves.
The court also has discretion over how closely it examines the estate’s holdings. Catholic bishops have avoided disclosing full assets and landholdings — as a judge chided San Diego’s diocese for doing in 2007 — like the Wicked Witch of the West avoids water. That is when judges should appoint independent accountants. The same applies to the BSA, especially when it is filing nationwide. Think local campgrounds.
Never before has a group of child sex abuse victims of this size been forced through a national bankruptcy, which throws out such a huge net. Is this more efficient? Well, yes. Can it be good for the victims and the public? It will all depend on the judge.