By Maria Chutchian
(Reuters) -The judge overseeing the Boy Scouts of America bankruptcy on Thursday approved the youth organization’s request to sign off on an $850 million settlement to resolve tens of thousands of sex abuse claims.
The ruling by U.S. Bankruptcy Judge Laurie Selber Silverstein of Delaware will enable the Boy Scouts to move ahead with a proposed reorganization plan that would allow the group to exit bankruptcy by the end of the year.
"I find that debtors have met the relevant standard," she said in a court hearing.
The organization must still obtain approval from creditors to move ahead with the deal in a formal plan to exit bankruptcy.
The creditors include victims of the abuse, who generally supported the settlement.
Founded in 1910, the Boy Scouts filed for Chapter 11 bankruptcy protection in February 2020 after being hit with a flood of sexual abuse lawsuits.
Claims multiplied after several U.S. states passed laws allowing accusers, including adults, to sue over allegations dating back several decades.
The Boy Scouts have apologized and said they are committed to fulfilling their “social and moral responsibility to equitably compensate survivors.” The organization has said "nothing can undo the tragic abuse that victims suffered" and that it believed the bankruptcy process was the best way to compensate them.
The Boy Scouts said in a statement that Silverstein's ruling is "an important development in Boy Scouts of America’s financial restructuring."
The settlement is backed by 250 local councils but opposed by insurers, who say representatives of the abuse claimants had too much say in the negotiations.
The Boy Scouts' insurers, which include Century Indemnity Company and Hartford Financial Services Group (NYSE:HIG), had argued throughout the bankruptcy process that some claims may be fraudulent.
Unless the Boy Scouts reach a resolution with the insurers, they are likely to fight over the final bankruptcy plan.
Century declined to comment on the judge's ruling.
Hartford did not immediately return a request for comment.
About 82,000 sex abuse claims have been filed against the Boy Scouts.
In addition to the $850 million, the settlement includes the creation of a “child protection committee” designed to ensure safety for Scouts in future.
The judge rejected a provision of the deal that would have allowed the Boy Scouts to pay up to $10.5 million in fees and expenses accrued by lawyers representing several thousand victims.
She also rejected the organization’s request to toss a prior deal through which insurer Hartford Financial Services Group agreed to contribute $650 million to a settlement, leaving its dispute with Hartford lingering. The Boy Scouts effectively abandoned the Hartford agreement after representatives of victims said they would not support it.
Lawyers for the Boy Scouts, the insurers and victims of abuse are expected to appear before Silverstein on Aug. 25.