The Boy Scouts of America has filed for bankruptcy
protection following multiple abuse lawsuits.
The BSA says the move will allow it to build a
compensation fund for abuse victims.
As a result of the move, all civil lawsuits against it are put on hold.
The BSA is struggling with declining membership as well as abuse claims.
Chief executive Roger Mosby said in a statement: “The BSA cares deeply about all victims of abuse and sincerely
apologizes to anyone who was harmed during their time in scouting. We are
outraged that there have been times when individuals took advantage of our
programs to harm innocent children.”
Court papers filed in Delaware listed liabilities of up to $1 billion and
assets of as much as $10 billion, reports say.
The filing was made under Chapter 11
of the US bankruptcy code which allows the group to keep operating and pay its
creditors over time.
The bankruptcy allows the BSA to
bring all of the lawsuits into one court and try to negotiate a settlement,
rather than using its funds to fight each case in court.
The group said it was setting up a
trust fund to compensate victims.
Roger Mosby said in a statement: “While we know nothing can undo the
tragic abuse that victims suffered, we believe the Chapter 11 process – with
the proposed trust structure – will provide equitable compensation to all
victims while maintaining the BSA’s important mission.”
According to the Wall Street Journal, the BSA has 261
councils which operate local troops and own assets including land in many
states. The bankruptcy move is designed to protect those councils, which hold
about 70% of all BSA assets, the publication says.
In its statement, the BSA said the councils, which are legally separate and financially independent of the national organization, had not filed for bankruptcy.
Colt Defense has filed for bankruptcy protection, as it grapples with a heavy debt load.
The Connecticut-based gunmaker says it plans to continue its normal business operations during its restructuring.
The company is struggling with more than $350 million in debt, as well as waning sales.
Colt’s fortunes were hurt by the loss of a contract in 2013 to supply the US army with its M4 assault rifle.
Keith Maib, the company’s chief restructuring officer, said: “Colt remains open for business and our team will continue to be sharply focused on delivering for our customers and being a good commercial partner to our vendors and suppliers.”
Colt has been plagued by financial problems in recent months.
In November 2014, Colt took out a $70 million loan from Morgan Stanley to help make an interest payment.
But in May 2015 it missed a $10 million interest payment.
Last year sales of Colt’s sports rifles and handguns fell 30%.
The company has a long US history, known for making American firearms for more than 150 years.
Colt previously filed for bankruptcy protection in 1992, emerging again two years later.
California city of Stockton has become the most populous US city ever to enter bankruptcy protection after a judge has approved its bankruptcy filing.
Stockton would be unable to provide basic government services without bankruptcy protection, said a federal judge.
California city of Stockton has become the most populous US city ever to enter bankruptcy protection
Stockton is a city of 290,000, located at 90 miles east of San Francisco.
The city saw its tax base plummet in the US housing market crash.
The ruling grants Stockton protection from creditors – who opposed the filing – while it negotiates debt repayment.
Stockton’s creditors – bond holders and insurers who had financed the city’s debt – argued the city had not cut spending enough nor sought a tax increase to avoid bankruptcy. With the city now in bankruptcy, they may not be repaid their full principals.
However, lawyers for the city said it had slashed its budget to the bone after a 70% decline in the city’s tax base.
Stockton first filed for bankruptcy in June 2012 after failing to come to an agreement with its creditors. The judge came to his decision on Monday after a three-day trial.
“It’s unfortunate that we have been forced to spend millions of dollars, thousands of hours and almost a year on this effort,” city manager Bob Deis said, referring to the fight with creditors who opposed the bankruptcy filing.
“These are valuable resources and money that could have gone toward addressing the critical safety needs of our community, restoring services, and paying our creditors.”
During the housing boom, Stockton developed its waterfront, with a new marina and sports complex, and negotiated generous pension and healthcare benefits for city employees.
When the housing market crashed beginning in 2008, the city’s revenue sank when a rush of home foreclosures caused a dip in property taxes and developer fees.
Officials were forced to make dramatic spending cuts to patch a budget deficit – roughly $26 million this year. The city eliminated a quarter of its police officers, one third of the fire department staff and 40% of all other employees. It also cut wages and medical benefits.
Stockton’s unemployment and violent crime rates now rank among the worst in the nation.
The city’s case was being watched closely by other struggling US cities and towns that may also seek bankruptcy protection.
Stockton’s largest debt is $900 million owed to the California Public Employees’ Retirement System to cover pension promises. The city has kept up with pension payments at the expense of other debt, arguing it needs a strong pension plan to retain its workforce.
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