Confirmed Plan Bars Post-Effective-Date Revocation of Expedited Distribution Elections

1. Introduction

This Third Circuit decision arises out of the Boy Scouts of America and Delaware BSA, LLC chapter 11 cases, filed amid extensive litigation alleging sexual abuse by adult volunteers. The confirmed reorganization plan (the “Plan”) channeled abuse-related claims to a Settlement Trust governed by Trust Distribution Procedures (the “TDP”).

The key issue on appeal was narrow but consequential for mass-tort settlement trusts: whether “Direct Abuse Claimants” who checked the ballot box electing a $3,500 “Expedited Distribution” could later rescind that election after the Plan became effective, based on alleged mistake, and pursue alternative claim-resolution options that could yield higher recoveries.

The appellants, D.S. and J.D., were among claimants who asserted they mistakenly elected the Expedited Distribution and sought to change course post-confirmation. The Bankruptcy Court denied relief; the District Court affirmed; and the Third Circuit affirmed.

2. Summary of the Opinion

The Third Circuit held that the Plan/TDP unambiguously made the Expedited Distribution a one-time, final election that foreclosed any further distributions for the same Direct Abuse Claim. Because neither the Plan, the TDP, nor the ballot provided a mechanism to revoke an Expedited Distribution election once made, allowing rescission would contradict the Plan’s express terms.

The Court further held that the requested relief would constitute an impermissible post-confirmation modification of a confirmed plan—something creditors are barred from seeking under 11 U.S.C. § 1127(b). Equitable powers under § 105 and procedural relief under Federal Rule of Civil Procedure 60(b)(1) cannot be used to override those statutory limits.

3. Analysis

A. Precedents Cited

  • In re Shenango Grp. Inc., 501 F.3d 338 (3d Cir. 2007)
    The Court relied on this case for the principle that a confirmed plan is construed using contract principles. That framing is pivotal: the dispute became a question of plan text, not claimant intent or equitable fairness, except to the limited extent contract law permits gap-filling.
  • Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728 (Del. 2006)
    Applying Delaware law (selected by the parties for plan interpretation), the Court used Lorillard’s plain-meaning rule: clear and unequivocal language binds the parties. This supported the refusal to read in a revocation right not found in the Plan/TDP.
  • Samuel J. Heyman 1981 Continuing Tr. ex rel. Lazarus S. Heyman v. Ashland LLC, 284 A.3d 714 (Del. 2022)
    Cited for Delaware’s standard for ambiguity: ambiguity exists only if provisions are reasonably susceptible to multiple interpretations. The Court concluded the Plan’s language foreclosing “any further distribution” after electing expedited relief was not reasonably read to allow a later switch.
  • In re Somerset Reg'l Water Res., LLC, 949 F.3d 837 (3d Cir. 2020)
    Used to state the standard of review in bankruptcy appeals (de novo for legal conclusions; clear error for facts; abuse of discretion for discretionary rulings), positioning the core issues as legal interpretation of plan text and statutory modification limits.
  • In re: Boy Scouts of Am. & Del. BSA, LLC, No. 20-10343 (LSS), 2022 WL 20541782 (Bankr. D. Del. Sept. 8, 2022), 650 B.R. 87 (D. Del. 2023), and In re Boy Scouts of Am., 137 F.4th 126 (3d Cir. 2025)
    These decisions supply the broader procedural posture: the Plan’s confirmation and appellate review. The 2026 panel treated the Plan as binding and operative, and focused on whether the requested election-change would contradict confirmed terms.
  • In re El Paso Pipeline Partners, L.P. Derivative Litig., No. CIV. A. 7141-VCL, 2014 WL 2768782 (Del. Ch. June 12, 2014) and Reklam v. Bellator Sport Worldwide LLC, No. CV 16-285-JFB-SRF, 2017 WL 5172397 (D. Del. Nov. 8, 2017)
    These authorities informed the Court’s treatment of implied terms and gap-filling. The Court emphasized Delaware’s caution in implying terms and refused to imply a rescission procedure where the Plan did not provide one—particularly where the parties considered revocability pre-confirmation but did not adopt it.
  • Aspen Advisors LLC v. United Artists Theatre Co., 843 A.2d 697 (Del. Ch. 2004)
    Cited for the limitation that implied terms cannot create “contractual protections” parties failed to secure at the bargaining table. This reinforced the conclusion that “equitable” gap-filling would improperly rewrite the allocation of settlement options.
  • In re Rickel & Assocs., Inc., 260 B.R. 673 (Bankr. S.D.N.Y. 2001) and In re Port Liberte Partners, No. CIV. A. 94-4854, 1995 WL 11186 (D.N.J. Jan. 5, 1995), aff'd sub nom. In re Port Liberte, 77 F.3d 463 (3d Cir. 1996)
    These cases anchored the statutory rule that § 1127(b) is the exclusive mechanism to modify a confirmed plan and that creditors are precluded from requesting such modification. The Third Circuit used them to classify rescission of remedy elections as a modification barred to claimants.
  • Matter of Allied Supermarkets, 21 B.R. 45 (Bankr. E.D. Mich. 1982)
    Treated as persuasive authority that revoking a prior election (there, a tardy ballot after an earlier election) can constitute a plan modification. The Third Circuit analogized an Expedited Distribution revocation to an attempted rewrite of plan treatment.
  • In re SC SJ Holdings, LLC, No. 21-10549 (JTD), 2023 WL 2598842 (D. Del. Mar. 22, 2023), aff'd sub nom. In re SC SJ Holdings, LLC, No. 23-1731, 2024 WL 1328233 (3d Cir. Mar. 28, 2024), cert. denied sub nom. SC SJ Holdings, LLC v. Pillsbury Winthrop Shaw Pittman, LLP, 145 S. Ct. 277 (2024)
    Used to support the proposition that even seemingly “minor” changes, if contrary to the plan’s express provisions, are impermissible modifications. This helped the Court reject any framing of rescission as a small administrative correction.
  • Norwest Bank Worthington v. Ahlers, 485 U.S. 197 (1988) and In re Fesq, 153 F.3d 113 (3d Cir. 1998)
    These cases limited the use of equitable and procedural tools. Ahlers constrained § 105 powers to “the confines of the Bankruptcy Code.” Fesq supported the view that procedural mechanisms (including Rule 60(b)(1) mistake relief) cannot negate substantive Code restrictions like § 1127(b).

B. Legal Reasoning

  1. Plan interpretation as contract (and plain meaning controls).
    Applying In re Shenango Grp. Inc. and Delaware contract principles, the Court treated the Plan/TDP as a binding contract-like instrument. The TDP’s text stating Expedited Distribution claimants are “not . . . eligible to receive any further distribution” was decisive. The absence of any rescission mechanism in the Plan, TDP, or ballot reinforced finality.
  2. Election occurred by ballot check-box; additional requirements were conditions to payment, not to the election.
    The Court rejected the argument that the election was incomplete until later steps (e.g., releases, documentation). It read the TDP’s “to receive payment” language as describing payment prerequisites, not as making the election revocable until completion.
  3. No implied revocation right (gap-filling rejected).
    Even assuming ambiguity, Delaware law’s narrow implied-covenant doctrine (as reflected in In re El Paso Pipeline Partners, L.P. Derivative Litig., Reklam v. Bellator Sport Worldwide LLC, and Aspen Advisors LLC v. United Artists Theatre Co.) did not permit insertion of a revocation procedure. The Court stressed that parties considered rescission pre-confirmation but chose not to include it, undercutting any claim that the omission was unforeseen.
  4. Rescission would be a post-confirmation plan modification sought by creditors, barred by statute.
    The Court treated a post-effective-date change from expedited to non-expedited tracks as a change to “treatment” under the Plan, hence a modification. Under 11 U.S.C. §§ 1127(b) and 1141(a), and authorities including In re Port Liberte Partners and In re Rickel & Assocs., Inc., creditors cannot seek to modify a confirmed plan.
  5. Equity and “mistake” relief cannot override § 1127(b).
    The Court acknowledged § 105 and Rule 60(b)(1) but held they cannot be used to do what the Code forbids, relying on Norwest Bank Worthington v. Ahlers and In re Fesq.

C. Impact

Although designated “Not Precedential,” the decision is practically significant for large bankruptcy settlement trusts (especially mass-tort and abuse-compensation structures):

  • Finality of ballot-based elections. Trust administrators and bankruptcy courts may treat ballot elections—where plan language is similarly categorical—as binding, reducing post-effective-date attempts to “trade up” after claimants later reassess value.
  • Drafting signal for plans and TDPs. If stakeholders want revocability windows, cure mechanisms, or “mistake” procedures, they must be written into the Plan/TDP. Silence will not readily be converted into an implied rescission right.
  • Limits on equitable clean-up. The opinion reinforces that courts cannot use § 105 or Rule 60(b) to grant remedies that functionally alter plan treatment in violation of § 1127(b), even where claimants assert error and even where the change seems administratively small.
  • Reliance interests and trust economics. Nonrevocability supports predictability in trust outflows and actuarial assumptions that often underpin confirmation feasibility. Allowing rescission at scale could destabilize settlement structures designed around fixed, quick-pay elections.

4. Complex Concepts Simplified

  • “Confirmed plan binds parties” (11 U.S.C. § 1141(a)).
    Once a chapter 11 plan is confirmed, it functions like a court-approved contract that binds debtors and creditors to its terms.
  • “Plan modification” (11 U.S.C. § 1127(b)).
    After confirmation, the Bankruptcy Code sharply limits who can change the plan and how. Generally, creditors cannot ask the court to alter plan terms; only specified plan proponents may seek modification through the statutory process.
  • “TDP” (Trust Distribution Procedures).
    The TDP is the rulebook for how the Settlement Trust processes, values, and pays claims. If the Plan “incorporates” the TDP, then TDP terms are part of the binding plan deal.
  • “Implied covenant” / “gap-filling” under Delaware law.
    Courts may imply a term only in rare situations where the contract truly does not address an issue and the omitted term is necessary to reflect what both parties would have agreed to. Courts will not use it to add protections a party failed to negotiate.
  • § 105 and Rule 60(b)(1) limits.
    Bankruptcy courts have equitable power and can sometimes grant relief for “mistake,” but those tools cannot be used to contradict express Bankruptcy Code constraints.

5. Conclusion

The Third Circuit affirmed that, under the Boy Scouts Plan and TDP, an Expedited Distribution election made on a claimant’s ballot was final and nonrevocable, and that permitting claimants to switch tracks post-effective-date would amount to an impermissible modification of a confirmed plan barred by 11 U.S.C. § 1127(b). The decision underscores plan finality, the primacy of plan text under contract principles, and the limited role of equity and “mistake” relief when they collide with the Bankruptcy Code’s strict post-confirmation modification regime.