The Roman Catholic Diocese of Rockville Centre, Ne

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

)

In re: )

) FOR PUBLICATION

THE ROMAN CATHOLIC DIOCESE OF ROCKVILLE )

CENTRE, NEW YORK, Chapter 11

)

Debtor. ) Case No. 20-12345 (MG)

)

MEMORANDUM OPINION AND ORDER SUSTAINING DEBTOR’S ELEVENTH

OMNIBUS OBJECTION TO CLAIMS

A P P E A R A N C E S:

JONES DAY

Counsel for the Debtor

250 Vesey Street, Floor 32

New York, NY 10281

By: Corinne Ball, Esq.

Andrew Butler, Esq.

Benjamin Rosenblum, Esq.

SLATER SLATER SCHULMAN LLP

Counsel for Certain Claimants

445 Broad Hollow Road, Suite 419

Melville, NY 11747

By: Stephenie Lannigan Bross, Esq.

PFAU COCHRAN VERTETIS AMALA PLLC

Counsel for Certain Claimants

31 Hudson Yards, 11th Floor

New York, NY 10001

By: Jason P. Amala, Esq.

MARSH LAW FIRM PLLC

Counsel for Certain Claimants

31 Hudson Yards, 11th Floor

New York, NY 10001

By: James R. Marsh, Esq.

MARTIN GLENN

CHIEF UNITED STATES BANKRUPTCY JUDGE

Pending before the Court is the eleventh omnibus claims objection (the “Objection,” ECF

Doc. # 2117) of the Roman Catholic Diocese of Rockville Centre, New York (the “Debtor”) that

is the debtor and debtor-in-possession of the above-captioned chapter 11 case. The Objection

seeks to disallow nine proofs of claim identified on Schedule 1 (the “Claims”) to a proposed

order appended to the Objection (“Proposed Order”). The Debtor asserts that each Claim was

released, channeled, and enjoined pursuant to the BSA Plan (as defined below). The deadline for

responses was June 16, 2023. Four response briefs were filed on behalf of six claimants

(“Responding Claimants”).1 The Debtor filed a reply in support of the Objection. (“Reply,”

ECF Doc. # 2190.)

For the reasons discussed below, the Court SUSTAINS the Objection and DISALLOWS

the Claims in Schedule 1 to the Proposed Order that have not been adjourned or withdrawn

(“Disputed Claims”).

I. BACKGROUND

This Objection pertains to nine claims that the Debtor argues were released because of

the confirmation of a chapter 11 plan of reorganization in the Boy Scouts of America case.

A. The Claims Process

On January 10, 2023, the Court entered the Order Approving Claim Objection

Procedures and Granting Related Relief (ECF Doc. # 1554), which were later amended and

entered as an order on February 21, 2023. (“Claim Objection Procedures,” ECF Doc. # 1679.)

1 The filed responses and corresponding claims are: (1) ECF Doc. # 2179, for Claim Nos. 90085, 90087 and

90166; (2) ECF Doc. # 2172, for Claim No. 90145; (3) ECF Doc. # 2174, for Claim No. 90157; (4) ECF Doc. #

2177, for Claim No. 90178. Withdrawals were filed for two claims: (1) ECF Doc. # 2169, for Claim No. 90300; and

(2) ECF Doc. # 2170, for Claim No. 90400. Claim No. 20089 was adjourned.

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The Claim Objection Procedures allow the Debtor to assert omnibus claim objections on

the grounds set forth in Bankruptcy Rule 3007(d), including on the grounds that the Debtor is not

liable to the claimant for the amount or claim stated. (See Claim Objection Procedures § 3(a).)

B. The BSA Plan and Confirmation Order

On February 18, 2020, the Boy Scouts of America and Delaware BSA, LLC

(collectively, “BSA”) filed voluntary petitions for relief under chapter 11 of the Bankruptcy

Code in the United States Bankruptcy Court for the District of Delaware. BSA commenced

jointly administered cases bearing case numbers 20-10343 and 20-10342 for the primary purpose

of addressing sexual abuse claims asserted against BSA. See Voluntary Petition for Non-

Individuals Filing for Bankruptcy, ECF Doc. # 1, In re Boy Scouts of America, No. 20-10343-

LSS (Bankr. D. Del. Feb. 18, 2020). On February 15, 2022, BSA filed the Third Modified Fifth

Amended Chapter 11 Plan of Reorganization for Boy Scouts of America and Delaware BSA,

LLC. See ECF Doc. # 8813, In re Boy Scouts of America, No. 20- 10343-LSS (Bankr. D. Del.

Feb. 15, 2022) (the “BSA Plan,” as was and may be amended, modified, or supplemented, and

together with any exhibits and schedules thereto).

On July 29, 2022, the Bankruptcy Court in that case issued an extensive opinion on

confirmation of the BSA Plan. The BSA Plan and Confirmation Order, modified in accordance

with the rulings in the Bankruptcy Court’s opinion, was confirmed by the Bankruptcy Court on

September 8, 2022. See Supplemental Findings of Fact and Conclusions of Law and Order

Confirming the Third Modified Fifth Amended Chapter 11 Plan of Reorganization (With

Technical Modifications) for Boy Scouts of America and Delaware BSA, LLC, ECF Doc. #

10316, In re Boy Scouts of America, No. 20-10343-LSS (Bankr. D. Del. Sept. 8, 2022).

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On March 27, 2023, the U.S. District Court for the District of Delaware affirmed the

BSA Confirmation Order on appeal. See ECF Doc. # 11057, In re Boy Scouts of America, No.

20-10343-LSS (Bankr. D. Del. Mar. 28, 2023). An appeal is pending in the U.S. Court of

Appeals for the Third Circuit, but on April 19, 2023 the Third Circuit denied motions to stay the

effectiveness of the BSA Plan pending those appeals. See Order Denying Motions for a Stay

Pending Appeal, ECF Doc. # 27, In re Boy Scouts of America, No. 23-1664 (3d Cir. April 19,

2023). The BSA Plan became effective on April 19, 2023. See Notice of Effective Date, ECF

Doc. # 11123, In re Boy Scouts of America, No. 20-10343-LSS (Bankr. D. Del. Apr. 9, 2023).

C. The Opt-In Order

In addition to alleging liability for sexual abuse against BSA, sexual abuse claims in the

BSA case implicate certain partner organizations presently or formerly authorized by the BSA to

sponsor or otherwise support scouting units. Many catholic parishes located within the

geographic region of the Debtor are chartered organizations. While the Debtor in this case does

not consider itself a BSA chartered organization as that term is used in the ordinary sense, the

Debtor states that it is, for purposes of the BSA Plan, expressly defined as a “Chartered

Organization.” (See Objection ¶ 19 (citing BSA Plan, Article V.S.8).) The Debtor notes that

certain claimants in this case have also asserted claims for for Boy-Scouts-related abuse. (Id. ¶

20.)

On October 7, 2022, and in accordance with the confirmed BSA Plan, the Debtor filed a

Motion for Entry of an Order Authorizing the Debtor to “Opt In” to Treatment as a

Participating Chartered Organization Under the Boy Scouts of America Chapter 11 Plan and

Granting Related Relief Pursuant to §§ 105(A) and 363 of the Bankruptcy Code and Bankruptcy

Rule 9019. (“Opt-In Motion,” ECF Doc. # 1349.) On December 2, 2022, this Court entered the

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Order Authorizing the Debtor to “Opt In” to Treatment as a Participating Chartered

Organization Under the Boy Scouts of America Chapter 11 Plan and Granting Related Relief

Pursuant to §§ 105(A) and 363 of the Bankruptcy Code and Bankruptcy Rule 9019. (“Opt-In

Order,” ECF Doc. # 1498.) Pursuant to that order, the Debtor made itself a “Participating

Chartered Organization,” as that is defined in the BSA Plan. The result is that the Debtor in this

case is a “Limited Protected Party” under the BSA Plan. BSA Plan, Article I.A.176.

D. The Claims at Issue & Debtor’s Basis for Objection

The Debtor has been named as a co-defendant in certain lawsuits with the BSA and

certain sexual abuse proofs of claim filed against the Debtor in this case indicate that the

claimant has also submitted a claim against the BSA. In addition, certain sexual abuse claims

asserted in the Debtor’s bankruptcy case implicate BSA either because, among other reasons, (i)

the alleged abuser was a scoutmaster, or (ii) the alleged abuse occurred in connection with

scouting events. (Objection ¶ 20.)

The Debtor submits that approximately thirty proofs of claim filed in this chapter 11 case

may relate to BSA or BSA-related activities in some fashion. While the Debtor believes that it

has defenses with respect to each BSA-related proof of claim, this Objection relates only to a

subset of these claims—nine to be exact—that expressly allege abuse occurring after 1975 in

connection with scouting-related activities. The Debtor states that these qualify as “Post-1975

Chartered Organization Abuse Claims” under the BSA Plan. (Objection ¶ 21.)

While examined in further detail in the Discussion section below, the Debtor’s argument

proceeds as follows: (a) all of the Claims here constitute Post-1975 Chartered Organization

Abuse Claims, as defined in the BSA Plan; (b) the BSA Plan releases and enjoins such Claims

against Limited Protected Parties; and (c) the Debtor is a Limited Protected Party pursuant to the

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Opt-In Order and BSA Plan. Thus, the Debtor argues that there is no basis for liability on any of

the Claims here.

The Debtor notes that Proof of Claim number 90166 was the subject of the Debtor’s

Sixth Omnibus Objection (see ECF Doc. # 1677), which sought to disallow the claim on a

different basis than the one asserted in this Objection. The Court sustained the objection to claim

number 90166 without prejudice.

E. The Responses

Two law firms filed responses opposing the Objection (“Slater Response,” ECF Doc. #

2179 and “Amala Responses,” ECF Doc. ## 2172, 2174, 2177, together the “Responses”),2 each

on behalf of multiple claimants. The arguments in the Responses are largely (if not purely) legal

arguments, and do not add any material claimant-specific facts. The Responses agree with the

facts stated above. The contents of the Responses and the legal arguments they make are

addressed in the Discussion section below.

II. LEGAL STANDARD

A. Default Claim Allowance Procedure

Section 501(a) of the Bankruptcy Code provides that “[a] creditor . . . may file a proof of

claim” to claim an interest in a debtor’s bankruptcy estate. 11 U.S.C. § 501(a). Section 502(a)

provides that a claim or interest, properly filed, “is deemed allowed, unless a party in interest . . .

objects.” 11 U.S.C. § 502(a). Pursuant to Federal Bankruptcy Rule 3001(f), a claimant

2 The “Slater Response” refers to the response brief filed on behalf of Claim Nos. 90085, 90087, 90166

because those Claimants are represented by Slater Slater Schulman LLP.

The “Amala Responses” refers to the responses filed on behalf of Claim Nos. 90145, 90157, 90178 because

those Claimants are represented by Pfau Cochran Vertetis Amala PLLC. Each of the Amala Responses are

substantively identical for purposes of this Objection, and thus the Amala Response on behalf of Claim No. 90145

will simply be designated as the “Amala Response” for ease of having a single reference to the arguments made by

Amala and his firm throughout. Both firms filed declarations in support of their motions.

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establishes a prima facie case against a debtor upon filing a proof of claim alleging facts

sufficient to support the claim. See FED. R. BANKR. P. 3001(f); see also 4 COLLIER ON

BANKRUPTCY ¶ 502.02[3][e] (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2019) (“The

proof of claim, if filed in accordance with section 501 and the pertinent Bankruptcy Rules,

constitutes prima facie evidence of the validity and amount of the claim under Federal Rule of

Bankruptcy 3001(f) and Code section 502(a).”).

Under section 502 of the Bankruptcy Code, if an objection is made, the court shall

determine the amount of such claim as of the petition date. In re Solutia, Inc., 379 B.R. 473, 483

(Bankr. S.D.N.Y. 2007) (citing 11 U.S.C. § 502(b); FED. R. BANKR. P. 3007). Section 502(b)(1)

provides that claims may be disallowed if they are “unenforceable against the debtor and

property of the debtor, under any agreement or applicable law . . . .” 11 U.S.C. § 502(b)(1).

“To overcome this prima facie evidence, an objecting party must come forth with

evidence which, if believed, would refute at least one of the allegations essential to the claim.”

Sherman v. Novak (In re Reilly), 245 B.R. 768, 773 (2d Cir. B.A.P. 2000). If the objector does

not “introduce[] evidence as to the invalidity of the claim or the excessiveness of its amount, the

claimant need offer no further proof of the merits of the claim.” 4 COLLIER ON BANKRUPTCY ¶

502.02[3][e] (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2019). But by producing

“evidence equal in force to the prima facie case,” an objector can negate a claim’s presumptive

legal validity, thereby shifting the burden back to the claimant to “prove by a preponderance of

the evidence that under applicable law the claim should be allowed.” Creamer v. Motors

Liquidation Co. GUC Trust (In re Motors Liquidation Co.), No. 12 Civ. 6074 (RJS), 2013 WL

5549643, at *3 (S.D.N.Y. Sept. 26, 2013) (internal quotation marks omitted); see also In re

Allegheny Int’l, Inc., 954 F.2d 167, 173–74 (3d Cir. 1992) (reciting identical burden-shifting

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framework).

To determine whether a claim is allowable by law, bankruptcy courts look to “applicable

nonbankruptcy law.” In re W.R. Grace & Co., 346 B.R. 672, 674 (Bankr. D. Del. 2006).

Accordingly, federal pleading rules also apply in assessing a proof of claim’s validity. See

Morse v. Rescap Borrower Claims Tr., No. 14 Civ. 5800 (GHW), 2015 WL 353931, at *4

(S.D.N.Y. Jan. 26, 2015) (citing In re DJK Residential LLC, 416 B.R. 100, 106 (Bankr. S.D.N.Y.

2009)).

B. Claim Allowance Procedure Order

In this case, the Claim Objection Procedures specifically identify and limit certain

objections to such federal pleading rules:

For a non-evidentiary hearing to address whether the Contested Claim has

failed to state a claim against the Debtor which can be allowed and should

be dismissed pursuant to Bankruptcy Rule 7012(b) (a “Sufficiency

Hearing”). Unless the Debtor serves the holder of the claim (the

“Claimant”) with a Notice of Merits Hearing (as defined herein), the

Sufficiency Hearing shall go forward at the return date set in accordance

with (f)(i) above (or such other date as may be scheduled by the Debtor).

The legal standard of review that will be applied by the Court at a

Sufficiency Hearing will be equivalent to the standard applied by the Court

upon a motion to dismiss for failure to state a claim upon which relief can

be granted, in accordance with Bankruptcy Rule 7012(b).

(Claim Objection Procedures ¶ 3(g)(iii).)

Bankruptcy Rule 7012(b) makes applicable Federal Rule of Civil Procedure 12(b)–(i).

See FED. R. BANKR. P. 7012(b). In turn, Federal Rule of Civil Procedure 12(b)(6) addresses

motions to dismiss for failure to state a claim upon which relief can be granted. FED. R. CIV. P.

12(b)(6). In other words, the Claim Objection Procedures limit the bases for Debtor’s objections

in non-evidentiary hearings, i.e., Sufficiency Hearings, to challenges under Rule 12(b)(6). This

is consistent with law in this Circuit stating that where a party objects to a claim as facially

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defective, the analysis of the claim “is guided by the familiar standards applicable to a motion to

dismiss.” In re Residential Capital, LLC, 563 B.R. 477, 487 (S.D.N.Y. 2016).

C. Motion to Dismiss Standard

In turn, to survive a motion to dismiss under Rule 12(b)(6), a complaint must plead

“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007). In determining the plausibility of the allegations, courts must assess

the complaint by “accepting all factual claims in the complaint as true, and drawing all

reasonable inferences in the plaintiff’s favor.” Lotes Co. v. Hon Hai Precision Indus. Co., 753

F.3d 395, 403 (2d Cir. 2014) (quoting Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106,

108 (2d Cir. 2010)). This tenet, however, is “inapplicable to legal conclusions.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action,

supported by mere conclusory, do not suffice.” Id.

To be plausible, “the complaint’s ‘[factual] allegations must be enough to raise a right to

relief above the speculative level.’” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir.

2010) (quoting Twombly, 500 U.S. at 555, 570). “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Where a complaint

pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line

between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at

557). Similarly, a complaint is properly dismissed when, as a matter of law, “the allegations in

[the] complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550

U.S. at 558.

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III. DISCUSSION

The discussion below proceeds as follows: (A) the Court explains the scope of the dispute

and then examines the Debtor’s generally applicable arguments with respect to all Claims; (B)

the Court analyzes the arguments in the Slater Response and Debtor’s Reply thereto; and (C) the

Court analyzes the arguments in the Amala Response and Debtor’s Reply thereto.

The Debtor’s Reply convincingly disposes of the arguments in the Slater and Amala

Responses. The Court concludes that the BSA Plan released the Disputed Claims; therefore, the

Disputed Claims must be disallowed here. Therefore, the Court SUSTAINS the Objection and

DISALLOWS the Disputed Claims.

A. The Debtor’s Objection and Scope of Dispute

The Debtor asserts that each of the Claims should be disallowed because they are

released, channeled, and enjoined pursuant to several provisions of the BSA Plan and

Confirmation Order. As such, the Debtor contends that there is no basis to state a claim against

the Debtor upon which relief can be granted.3 The Debtor’s argument begins with certain points

that are not disputed by the claimants.

• The effective date of the BSA Plan was April 19, 2023, thus it is now effective.

• Each of the proofs of claim that are subject of this Objection allege scouting-

related abuse that first occurred on or after January 1, 1976, and thus constitute

“Post-1975 Chartered Organization Abuse Claims,” as defined in the BSA Plan.

• In accordance with a Court Order in this case, the Debtor made itself a

“Participating Chartered Organization” and, in turn, makes the Debtor a “Limited

Protected Party” under the BSA Plan. (See Opt-In Order.)

3 The Debtor does not explain what standard it considers applicable for purposes of disallowing the Claims

here. However, as this Court has already explained in the Fourth Omnibus Objection Opinion in this case, see In re

Roman Cath. Diocese of Rockville Ctr., 650 B.R. 58, 69 (Bankr. S.D.N.Y. 2023), the Claim Objection Procedures

impose a Rule 12(b)(6) standard, and it is appropriate to dismiss released claims pursuant to that standard.

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These three points form the basis for one final and central point to the Debtor’s argument,

which are not disputed by the Responding Claimants—the now-effective BSA Plan affords the

Debtor certain protections from the Claims at issue here. Specifically, the BSA Plan enjoined

and released the Claims via a channeling injunction. The Debtor cites the following portions of

the BSA Plan in support:

• “Holders of Post-1975 Chartered Organization Abuse Claims and Pre-1976

Chartered Organization Abuse Claims shall be enjoined from prosecuting any

outstanding, or filing any future, litigation, Claims, or Causes of Action arising

out of or related to such Post-1975 Chartered Organization Abuse Claim and Pre-

1976 Chartered Organization Abuse Claim against any of the Limited Protected

Parties and may not proceed in any manner against any of the Limited Protected

Parties in any forum whatsoever, including any state, federal, or non-U.S. court or

any administrative or arbitral forum, and are required to pursue such Post-1975

Chartered Organization Abuse Claims and Pre-1976 Chartered Organization

Abuse Claims solely against the Settlement Trust as provided in the Settlement

Trust Documents.” BSA Plan, Article III.B.10.b(iii).

• “[A]ll holders of Abuse Claims shall, and shall be deemed to, expressly,

conclusively, absolutely, unconditionally, irrevocably, and forever discharge and

release: … (b) each and all of the Limited Protected Parties and their respective

property and successors and assigns of and from all Post-1975 Chartered

Organization Abuse Claims and any and all Claims and Causes of Action

whatsoever, whether known or unknown, asserted or unasserted, derivative or

direct, foreseen or unforeseen, in law, equity, or otherwise, whether for tort, fraud,

contract, veil piercing or alter-ego theories of liability, successor liability,

contribution, indemnification, joint liability, or otherwise, arising from or related

in any way to such Post-1975 Chartered Organization Abuse Claims…” Id. at

Article X.J.3.

• “(b) the sole recourse of any holder of a Post-1975 Chartered Organization Abuse

Claim against a Limited Protected Party on account of such Post-1975 Chartered

Organization Abuse Claim shall be to and against the Settlement Trust pursuant to

the Settlement Trust Documents, and such holder shall have no right whatsoever

at any time to assert such Post-1975 Chartered Organization Abuse Claim against

any Limited Protected Party or any property or interest in property of any Limited

Protected Party…” Id. at Article X.F.1.

With these undisputed facts established, the Debtor’s argument for disallowing the

Claims is simple—because the BSA Plan releases the Claims against the Debtor, there is no basis

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to allege liability against the Debtor on the Claims. See Gupta v. Headstrong, Inc., No. 17-CV-

5286 (RA), 2018 U.S. Dist. LEXIS 56008, at *7–8 (S.D.N.Y. Mar. 30, 2018) (holding that it is

appropriate to grant a motion to dismiss on the basis of release where the terms of the release are

clear and unambiguous); ResCap Liquidating Tr. v. Liebert Corp. (In re Residential Capital,

LLC), Nos. 12-12020 (MG), 14- 01969 (MG), 2015 Bankr. LEXIS 1820, at *3–4 (Bankr.

S.D.N.Y. June 2, 2015) (granting in part and denying in part motion to dismiss claim in light of

third-party release in chapter 11 plan); accord In re Roman Cath. Diocese of Rockville Ctr., 650

B.R. at 68–72 (disallowing and expunging claims subject to the Debtor’s Independent

Reconciliation and Compensation Program and other contractual releases, pursuant to the Claim

Objection Procedures Order in this case).

A motion to dismiss claims should be granted where the claims are subject to a release

that is not subject to any factual dispute. As this Court recognized in the Fourth Omnibus

Objection Opinion in this case, the Claim Objection Procedures apply a motion to dismiss

standard that makes dismissal of released claims appropriate. See In re Roman Cath. Diocese of

Rockville Ctr., 650 B.R. 58, 69 (Bankr. S.D.N.Y. 2023). Furthermore, the parties agree on all

relevant facts pertaining to the Claims and the release (i.e., the BSA Plan). The Responding

Claimants argue that as a matter of timing, their claims should not be disallowed yet. These are

legal arguments that may properly be addressed applying a motion to dismiss standard; there are

no disputed facts that must be resolved at a merits hearing.

B. Slater Response

The Slater Response argues that, despite its claims being subject to the BSA Plan, the

Debtor’s attempt to disallow the claims is “premature.” The Slater Response observes that there

are presently sixteen appeals pending in the Third Circuit from the BSA Confirmation Order.

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(Slater Response ¶ 2.) The Third Circuit declined to stay the effective date of the BSA Plan.

Nevertheless, the Slater Response argues that the fate of the BSA Plan is unsettled. (Id.)

The Slater Response argues that claimants are faced with a potential “legal limbo.” (Id. ¶

3.) If their claims in this bankruptcy case are expunged, and then the BSA Confirmation Order is

vacated, the claimants argue that they will be left with no compensation and no forum in which

to proceed. They argue that this result is fundamentally unfair and unnecessary and would be

avoided if this objection is held in abeyance pending resolution of the Third Circuit appeals.

The Debtor reiterates that the BSA Plan is effective, and that the Third Circuit refused to

grant a stay pending appeal. Debtor cites authority for the uncontroversial assertion that

confirmed and unstayed plans are routinely enforced pending appeal. See, e.g., In re Prudential

Lines, 170 B.R. 222, 244 (S.D.N.Y. 1994) (noting that “it has long been held that in the absence

of a stay pending appeal of the plan confirmation, the bankruptcy court is entitled to implement

the plan”). The Slater Response cites no countervailing precedent, and relies only on its

argument that the Responding Claimants will have “no forum in which to proceed” if their

claims are disallowed and the BSA Confirmation Order is vacated. That is not a meritorious

reason to delay ruling on the Debtor’s Objection to the Claims at issue here.

C. Amala Response

The Amala Response poses a different argument that despite its Claims being subject to

and released by the BSA Plan, certain preexisting injunctions in the case were actually extended

by the BSA Plan for some period beyond the Effective Date, which, the Amala Response

contends, prevents the Debtor from moving to disallow the Claims.

This argument relies on a Consent Order that was entered during the pendency of the Boy

Scouts case. The order not only stayed certain actions by claimants against the BSA debtor and

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certain affiliated parties, but also prevented the BSA debtor and certain affiliates from “seeking

remand, discovery, or dismissal” of the claimant’s claims (the “Stay”). (See Amala Decl., Ex. 3,

at 8.) The parties appear to agree that this Stay applied to claims made against the Debtor,

apparently through later amendment(s) to the Consent Order. (See Amala Decl., Ex. 2.)

Next, the Amala Response argues that, upon confirmation of the BSA Plan, this Consent

Order and Stay was to remain effective for some additional period of time. The Amala Response

cites the provision of the BSA Plan that states:

All injunctions and stays arising under or entered during the Chapter 11

Cases, whether under sections 105 or 362 of the Bankruptcy Code or

otherwise, and in existence on the Confirmation Date shall remain in full

force and effect until the latest to occur of, as applicable: the Effective

Date, the Release Date (as defined in the applicable Insurance Settlement

Agreement or other settlement agreement), and the Limited Protected

Party Injunction Date (which Limited Protected Party Injunction Date

shall be no later than one (1) year following the Effective Date except as

provided in the Settlement Trust Agreement).

To the extent not otherwise in place, pending the occurrence of the Release

Date (as defined in the applicable Insurance Settlement Agreement), the

United Methodist Release Effective Date (as defined in the United

Methodist Settlement Agreement), or other release date set forth in any

other settlement agreement, any Claim that would be released or subject to

the Channeling Injunction upon the occurrence of conditions set forth herein

and in any applicable settlement agreement (including the occurrence of the

Release Date or similar defined term (as defined in the applicable settlement

agreement) shall be stayed and enjoined pending satisfaction of such

conditions (the “Post-Confirmation Interim Injunction”).

BSA Plan, Article X.D (emphasis added).

The Amala Response argues that this means all survivors’ claims against the Debtor

remain stayed, cannot be channeled or dismissed until at least April 19, 2024, and cannot be the

subject of action by the Debtor, including an action to have the claims dismissed or disallowed.

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The first problem with the Amala Response is that it does nothing beyond citing this

isolated provision to support its argument. It does not show how the defined terms in the BSA

Plan relate to one another or the Claims at issue. The Amala Response selects the longest time

frame in the list of options for how long “all injunctions and stays” will be extended. This

ignores that this list begins with the qualifier “as applicable,” and that the list itself includes other

triggering dates, like the plan Effective Date, as possible dates for expiration of such stays.

While the BSA Plan implements a complex system to stay, channel, and release various

types of claims against many different parties, the Amala Response lays out no principled

reasoning to explain why the Stay expires for the specific claims in question one year after the

effective date of the plan. Importantly, the Amala Response does not contend that there is any

path towards successfully litigating the Claims at issue here. The upshot of the entire argument

is that while the BSA Plan clearly releases and enjoins these Claims, the Court must wait one

year before entertaining a motion to disallow them, without any explanation what purpose this

would serve under the BSA Plan.

The issues with the Amala Response interpretive argument are further compounded when

examining the entire BSA Plan and other provisions related to the Claims at issue. No one

contests that the Claims here are subject to the channeling injunction in the plan. The release and

the channeling injunction in the BSA Plan became effective on the “Effective Date” of the BSA

Plan, by its express terms.4 The Debtor convincingly explains why the BSA Plan allows the

4 See, e.g., BSA Plan, Art. X.J.3. (“Releases by Holders of Abuse Claims. As of the Effective Date….”); id.,

Art. X.F.1 (“on and after the Effective Date, all Persons that have held or asserted, currently hold or assert, or that

may in the future hold or assert, … any Post-1975 Chartered Organization Abuse Claim against the Limited

Protected … shall be permanently and forever stayed, restrained and enjoined…”); id., Art. X.C. (plan becomes

binding and effective on the Effective Date); see also Notice of Effective Date, ECF Doc. # 11123, In re Boy Scouts

of America, No. 20-10343-LSS (Bankr. D. Del. Apr. 9, 2023), Ex. A at 2 (“Article X of the Plan contains important

releases of the Debtors and certain third parties, exculpation, and injunction provisions, including, without

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Debtor to enforce the channeling injunction and why nothing in the BSA Plan should be

construed to limit the Debtor’s ability to do so.

First, the channeling injunction begins with the phrase “Notwithstanding anything to the

contrary herein . . . .” BSA Plan, Art. X.F.1. Thus, all other provisions of the BSA Plan yield to

the channeling injunction, rather than the channeling injunction yielding to the post-confirmation

interim injunctions pointed to in the Amala Response.

Second, the BSA Plan also makes plain that the Debtor here may enforce the channeling

injunction:

Any Protected Party, Limited Protected Party, or Opt-Out Chartered

Organization may enforce the Channeling Injunction as a defense to any

Claim (in whole or in part) brought against such Protected Party, Limited

Protected Party, or OptOut Chartered Organization that is enjoined under

the Plan as to such Protected Party, Limited Protected Party, or Opt-Out

Chartered Organization and may seek to enforce such injunction in a court

of competent jurisdiction.

BSA Plan, Article X.G.5.

Third, the BSA Plan further provides that nothing in the BSA Plan shall be construed to

limit the scope, enforceability, or effectiveness of the Channeling Injunction:

Nothing in the Plan or the Settlement Trust Documents shall or shall be

construed in any way to limit the scope, enforceability, or effectiveness of

the Channeling Injunction or the Settlement Trust’s assumption of all

liability with respect to Abuse Claims.

BSA Plan, Article X.G.3.

Considering these provisions, the Amala Response’s argument—which is barely

explained in the context of the single provision it points to—is also at odds with the remainder of

limitation, the Channeling Injunction, the protection for Insureds and Co-Insureds of Settling Insurance Companies,

the Post-Confirmation Interim Injunction, and the Insurance Entity Injunction. Pursuant to the Confirmation Order

and Affirmation Order, all such provisions are now in full force and effect.”).

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the BSA Plan and how it treats the Claims at issue. The Debtor has clearly shown that objecting

and moving to disallow the Claims is not barred by the BSA Plan; indeed, that action seems to be

a contemplated effect of the Plan for Limited Protected Parties that are subject to parallel

litigation for such claims.

For those reasons, the Amala Response fails to provide any meritorious reason to delay

ruling on the Debtor’s Objection to the Claims at issue here. In turn, the Debtor has clearly

shown that the Disputed Claims are all subject to releases in the BSA Plan, and that the Disputed

Claims should be disallowed.

IV. CONCLUSION

For the reasons discussed herein, the Court SUSTAINS the Objection and DISALLOWS

the Disputed Claims.

IT IS SO ORDERED.

Dated: July 13, 2023

New York, New York

Martin Glenn

_____ _________

MARTIN GLENN

Chief United States Bankruptcy Judge

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