Novel Issues of Chapter 11 Mass Tort and Complex Claims Cases Impact Claims Against Unrelated Debtors

The issues in Rockville stem from the joint voluntary Chapter 11 petitions filed by the BSA and Delaware BSA in 2020 to address the growing number of sexual abuse claims asserted against those organizations. The BSA reorganization plan, which was confirmed by the Bankruptcy Court and later by a U.S. district court, faces pending appeals in the U.S. Court of Appeals for the Third Circuit. The Third Circuit, however, has denied motions to stay the effectiveness of the BSA plan pending these appeals.

Some of the abuse claims asserted against Rockville implicate certain "participating chartered organizations," a class that Rockville opted into under the BSA plan. As a result of being classified as a participating chartered organization, Rockville also became a "limited protected party" under the BSA plan, which afforded it certain releases against BSA's creditors who might also be creditors of Rockville. Specifically, BSA creditors were enjoined from prosecuting any abuse claims arising after 1975 against limited protected parties. Of the roughly 30 claims in which Rockville is a co-defendant with BSA, nine alleged abuse occurred after 1975.