The US Supreme Court lifted an administrative stay that had temporarily halted the Boy Scouts of America’s bankruptcy plan, allowing the resumption of payments from the largest sex abuse settlement in US history.
In a single short order issued on Thursday, the high court overturned a previous order by Justice Samuel Alito on Feb. 16 that had paused the activities of a $2.46 billion trust designed to compensate approximately 82,000 former scouts with child sex abuse claims. The application to keep the bankruptcy plan on hold until the court rules on an appeal from Purdue Pharma LP’s opioid case was denied by the justices.
A small group of abuse claimants who were challenging the Boy Scouts’ plan due to its contentious liability releases for the organization’s local councils and sponsors had requested to halt the settlement in order to maintain the status quo of the case. The justices are expected to rule on the legality of nonconsensual releases, particularly in relation to Purdue’s Sackler family owners, later this year.
The end of the six-day pause in the Boy Scouts bankruptcy plan is a relief for the many former scouts who voted in favor of the non-profit’s Chapter 11 plan, which became effective in April 2023 after three years of bankruptcy proceedings.
“We were confident in this outcome and are grateful that the High Court has decided that the confirmation plan can move forward without further delay,” said Adam Slater of Slater Slater Shulman LLP, who represents claimants supporting the deal. “With more than 12,400 survivors in this case over the age of 70 and more than 2,200 over the age of 80, these brave individuals deserve to receive compensation during their lifetimes.”
Alito’s implementation of a stay signaled a departure from traditional norms supporting the equitable mootness doctrine, where appellate courts refrain from disrupting corporate bankruptcy plans that have been approved and executed.
The 144 claimants challenging the liability releases in the Boy Scouts plan explained that they wish to prevent their appeal, currently pending at the US Court of Appeals for the Third Circuit, from being dismissed based on the doctrine.
During arguments in December in Harrington v. Purdue Pharma, the Supreme Court seemed divided, with the case expected to establish significant nationwide precedent on the permissibility of nonconsensual liability releases.
The case is Lujan Claimants v. Boy Scouts of America, U.S., No. 23A741, Order 2/22/24.