Bankruptcy Court Rejects Key Portions of BSA’s Proposed Settlement and Foresees “Epic Confirmation Fight”
We adamantly oppose the BSA’s proposed settlement because it fails to provide fair compensation to survivors. Dozens of other firms share our concerns, and we have collectively filed dozens of objections to the settlement. For example, the BSA’s latest proposal allows its “local councils” to keep approximately $1.2 billion in assets that could be available to compensate abuse survivors, and could provide a massive windfall for insurance companies.
On August 20, 2021, the bankruptcy court rejected key parts of the BSA’s proposed settlement, and noted BSA appears headed toward an “epic confirmation fight” if it does not take meaningful steps to address the objections raised by abuse survivors, insurers, and charter organizations. The judge did not approve the BSA’s proposed settlement in any way, shape, or form:
“Let me emphasize the limited nature of my ruling today. I am being asked to approve Debtor’s entry into the RSA. I am not approving the term sheet, the fourth amended plan, any disclosure statement, or anything else, and the order I entered today does not suggest that I will do so or need to do so.”
She also cautioned that she may ultimately find that BSA was “wrong” to enter into a settlement agreement with some parties and she may reject some or all of BSA’s proposed plan:
“As I said in argument, a Court is particularly ill-suited to address strategic business decisions such as this one. Debtors may ultimately be wrong in their assessment, but that is not the test of business judgment. While in the words of Ms. Lauria, unless there are further resolutions, this case is headed toward an epic confirmation fight. Debtors choice of which fights to have is due some deference. Ultimately, whether any plan is confirmable is my decision.”
You can read the entirety of Judge Silverstein’s ruling by clicking here.