HAGÅTÑA (The Guam Daily Post) — U.S. Supreme Court Justice Samuel Alito has ordered an administrative stay on a lower court order affirming confirmation of the bankruptcy plan for the Boy Scouts of America in consideration of an application from a group of claimants, including those represented by a Guam law firm, who asked the Supreme Court of the United States to stay the bankruptcy plan over concerns that it would release certain entities from liability.
The claimants asked for a temporary administrative stay of the plan pending SCOTUS’ resolution of their stay application.
According to a response from BSA, the application seeks to impose a stay on a Chapter 11 reorganization plan that has been effective for 10 months.
Prior reporting from The Associated Press stated that the $2.4 billion bankruptcy plan would let the Boy Scouts keep operating while compensating “tens of thousands of men who say they were sexually abused as children.”
Earlier this month, 144 abuse claimants, including 75 individuals represented by Lujan & Wolff LLP, submitted an application for a stay to SCOTUS, asking that the bankruptcy plan be paused pending a challenge in the 3rd U.S. Circuit Court of Appeals and pending disposition of a writ of certiorari to SCOTUS should the 3rd Circuit affirm the plan.
The stay application states that the represented claimants suffered childhood sexual abuse by various “non-debtor, third-party entities that the bankruptcy plan releases from liability.”
The claimants objected to this release under the argument that the bankruptcy code does not authorize federal courts to approve such releases, the same reason as petitioners in the Purdue Pharma case, a separate bankruptcy settlement case before SCOTUS, according to the stay application.
“Smelling an opportunity to sweep this matter under the rug before this court issues its ruling in Purdue Pharma – and thus rob abuse claimants of their ability to seek vindication against the entities who turned a blind eye to their pain and suffering as a result of sexual abuse – several of the parties, including BSA, have asked the 3rd Circuit to dismiss the appeal under the equitable mootness doctrine, a ‘curious doctrine’ that ‘permit(s) federal district courts and courts of appeals to refuse to entertain the merits of live bankruptcy appeals over which they indisputably possess statutory jurisdiction and in which they can plainly provide relief,’” the stay application stated.
The 3rd Circuit has declined to grant dismissal for now, referring the matter to the merits panel, but the danger to the claimants remains because the bankruptcy plan continues to be implemented in bankruptcy court, the stay application stated. It added that there is a genuine chance that more than a year could pass before the 3rd Circuit issues a decision on the merits of the case.
“Given that various parties have already sought dismissal under the equitable mootness doctrine, it is inevitable that they will continue to push for this relief as the bankruptcy plan’s implementation proceeds further given their strong interest in ensuring Purdue Pharma does not apply to this case,” the stay application stated, adding that BSA filed an amicus brief in the Purdue Pharma case “practically begging” SCOTUS to hold that any ruling invalidating non-consensual, non-debtor third-party releases is inapplicable to the BSA case.
In response to the stay application, BSA stated that the applicants only represent 0.2% of the overall claimants and seek to elevate their own interest above other claimants and halt “ongoing work to finally provide compensation to aging survivors.”
The organization argued that the request for a stay was improper, that the applicants had not provided legal authority for the stay, and that the applicants have not shown they will ever have a plausible case for certiorari from SCOTUS.
In addition to BSA’s arguments, insurers argued that the BSA case does not present the same issues as the Purdue Pharma case, outlining various claimed distinctions between the two.
In his order dated Feb. 16, Alito ordered that the March 28, 2023, order from the District Court of Delaware affirming the confirmation of the bankruptcy plan be administratively stayed, along with consolidated cases, pending further order from himself or SCOTUS.
The U.S. Supreme Court building is seen on Sunday, July 11, 2021, in Washington, D.C.
