Written October 12, 2023 by Jillian Ruck, COO, CHILD USA

Bankruptcy and Child Sex Abuse: Where We’ve Been and Where We’re Going

Over the last twenty years, we have seen numerous organizations exposed for their negligence and in some cases active cover-up and perpetration of child sex abuse.  From the Catholic Church to USA Gymnastics and the Boy Scouts of America.  The Statute of Limitations (SOL) Reform movement has opened courthouses to the victims who, in turn, have been able to hold these organizations accountable.  Unofrtunately, many of these organizations have found a way to circumvent the justice and accountability the SOL Reform movement established, and that is the Federal Bankruptcy system, and in particular, Chapter 11.

Why do organizations file for bankruptcy?

As the SOL Reform movement has been opening window legislation in various states, most of these organizations have been filing for voluntary bankruptcy to avoid being held accountable and to pay pennies on the dollar.  Once a victim enters into a bankruptcy settlement, they are ineligible to file a suit under window legislation, and this lets the organizations pay out much less money than the victims deserve to compensate them for their abuse.

Because most of these organizations have been using bankruptcy as an out to accountability under window legislation, CHILD USA has been working to reform the bankruptcy system to make sure they are still held responsible.  This system is not set up in a way to deal with cases of child sex abuse and in effect silences and re-traumatizes the victims who are forced to file under this system. 

What has CHILD USA done about this issue?

To work on this issue, CHILD USA held various round tables with bankruptcy experts to understand the realities of the system and how victims of child sex abuse were being re-traumatized and made powerless through the system.  What we discovered is that the Chapter 11 system is being abused by organizations filing under this code in response to child sexual abuse lawsuits.  Chapter 11 is meant for use by a business that has fallen on hard times and owes debts to various people/companies.  It is not meant for an organization that actively covered up crimes perpetrated by its employees.

After consulting with these experts, CHILD USA came to four reforms that are desperately needed to make the bankrupty system better and more humane for victims of child sex abuse.  You can read more about these reforms here: Federal Bankruptcy Code Reform: Making Chapter 11 Proceedings Humane for Child Sex Abuse Victims

CHILD USA, along with our sister organization CHILD USAdvocacy, has been working to educate lawmakers at the federal level (as this is the only level of government that can reform this system) about the reforms that are needed to make the process better for victims of child sexual abuse and better for society. 

Additionally, CHILD USA has held and is continuing to hold CLE (Continuing Legal Education) courses to educate the lawyers who take these cases about how these cases affect victims and what reforms we are advocating for to make the system better.

What can you do?

In the Netflix documentary, Scouts Honor, we will see the reality of how the victims of the abuse in the Boy Scouts of America have further suffered as they have gone through the bankruptcy process.  We ask that everyone watch this documentary which features our CEO and Founder, Marci Hamilton, our Board Member, Tom Krummins, and the Executive Director of our sister organization CHILD USAdvocacy, Kathryn Robb, to understand the realities of bankruptcy and child sex abuse cases.

To learn more about the failings of the bankruptcy system and the Boy Scouts of America, check out the following resources on our website: