New York youth club seeks to arbitrate 140 bankrupt sex abuse claims

(Reuters) – The Madison Square Boys & Girls Club, which operates six youth centers in New York, told a bankruptcy judge on Friday it intended to use its Chapter 11 case to arbitrate more a hundred sexual abuse complaints involving a doctor who volunteered at the centers decades ago.

Madison Square, which filed for Chapter 11 protection in New York on Thursday, told U.S. Bankruptcy Judge Sean Lane in a hearing on Friday that bankruptcy mediation was the only way to bring sexual abuse plaintiffs and insurers at the negotiating table before the nonprofit runs out of funds.

“We are here to fairly and equitably compensate the survivors of what they describe as hideous sexual abuse that took place many years ago at Madison’s former premises,” attorney Alan Kornberg said.

Without bankruptcy protection, the 138-year-old youth organization would likely run out of money in 60 days and be forced into liquidation, Kornberg said.

Almost all of the abuse allegations stem from the conduct of a single physician, Reginald Archibald, who volunteered in Madison from the 1940s through the 1980s. Archibald, who died in 2007, also worked as a pediatric endocrinologist at the hospital Rockefeller University, which revealed Archibald’s history of sexual misconduct during an investigation in 2018.

Archibald’s victims have filed dozens of lawsuits against Madison and Rockefeller, helped by a 2019 New York law that eased statutes of limitations for victims of child abuse.

Madison reached settlements with nine abuse plaintiffs, spending $3.9 million on settlements and legal costs. It could not survive a piecemeal approach to resolving the remaining 140 claims, the nonprofit said.

Madison will ask Lane to approve a relatively quick mediation process with abuse claimants and insurers, Kornberg said. The youth club will also seek to put the case on hold while the mediation takes place, halting nearly all activity other than mediation in a bid to minimize costs and litigation, according to Kornberg.

Rockefeller said he would oppose both demands, arguing that his exclusion from the proposed mediation and bar from suing Madison would impair his ability to defend himself against the abuse allegations.

A lawyer representing victims of abuse also expressed skepticism about the proposed suspension of the case. Madison Square’s approach could limit abuse victims’ ability to investigate assets that Madison Square or the wider Boys and Girls Club of America might contribute to a bankruptcy settlement, attorney James Stang said.

Lane will review the proposed mediation schedule and stay request later in July.

The case is In re Madison Square Boys and Girls Club, US Bankruptcy Court for the Southern District of New York, No. 22-10910.

For the Madison Square Boys and Girls Club: Alan Kornberg of Paul, Weiss, Rifkind, Wharton & Garrison

For Rockefeller University Hospital: Gregg Galardi of Ropes & Gray

For the Abuse Victims Ad Hoc Committee: James Stang of Pachulski Stang Ziehl & Jones

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