Catholic Churches Inspire Other Organisations To File For Bankruptcy To Evade Sexual Assault Lawsuits

Organisations like USA Gymnastics and Boy Scouts of America are following the lead of over fifteen Catholic churches, in filing for bankruptcy to seek protection from lawsuits filed against them by sexual assault victims, reports Wall Street Journal (WSJ).

“There is an expectation in the restructuring community that we will see more of these types of chapter 11 filings,” said Adam Paul, a lawyer with Kirkland & Ellis LLP.

Chapter 11 of the United States Bankruptcy Code provides for ‘reorganization’ of an entity and freezes all the lawsuits against it. This practice of using Chapter 11, to seek protection and shield assets from the claims of vulnerable victims, was the brainchild of the Catholic Church.

First used by the Archdiocese of Portland, this legal mechanism was later adopted by 15 other Catholic dioceses and religious orders in the US. In spite of such protection, Catholic dioceses and related entities have paid out almost $4 billion to settle 19,000 sexual-abuse allegations.

Boy Scouts of America (BSA), one of the largest scouting and youth organisations in the US, has been hit by over 200 child abuse cases. The mission of this non-profit organisation is to “prepare young people to make ethical and moral choices over their lifetimes by instilling in them the values of the Scout Oath and Law.”

USA Gymnastics is the national governing body of gymnastics in the US and is tasked with selecting the national teams for the Olympic Games and World Championships