Chapter 11 announced

[5thGenTexan]

5 minutes ago, yknot said:

There is so much to unpack here it is hard to keep up. 

Council liability question: The prevailing view seems to think Councils that do not have abuse cases are likely "safe" from litigation. However, many of these cases happened years ago, and so many councils have been merged or moved around, how does anyone know what the liability trail is and if you are "safe"? 

Frozen payments: If Chapter 11 puts a lid on court cases and insurance pay outs for abuse cases, what happens to run of the mill claims for things like injuries, negligence, etc.? Our insurers seem rather cranky. 

I would be interested in data on where or in what setting or type of CO most abuse cases occurred. There's some in the filing but it doesn't get granular enough. 

There are a lot of bad optics here that will continue for the next 2 to 5 years at least, with an ensuing effect on membership. According to the lawyers, the bankruptcy hearing portion may conclude within 2 year but the aftermath, if there is anything left of scouting, will take quite a bit more time to deal with. We've all been watching from the outside but now that the thing is here, the guts of it seem a lot uglier  than imagined. I"m hopeful for a complete restructuring, but by then it might be hard to do a reset.
 

 

 

 

It would appear the attorneys plan on going after Council resources as well regardless of their involvement,  

https://news.yahoo.com/boy-scouts-files-chapter-11-054911909.html

 

Quote

In the bankruptcy proceedings, Scouts are likely to argue that assets such as property owned by local troops are separate and should be left untouched. The survivors are likely to argue that the court should not allow the Boy Scouts to protect those assets. 

In its Tuesday filing, Boy Scouts estimated about $1 billion in assets and between $500 million and $1 billion in liabilities. 

But much of Boy Scout property actually is owned by regional councils across the country rather than the national council, which claimed just $240 million in land assets in its 2018 tax filings. By contrast, the USA TODAY Network found $101 million in local councils' property in New York alone. 

"Assets are separate — they’re going to make that argument, and we’re going to contest it," said Kosnoff, the attorney. "Under the bylaws of the Boy Scouts they have absolute control over the assets that may be titled to the council." 

 

[mds3d]

24 minutes ago, 5thGenTexan said:

It would appear the attorneys plan on going after Council resources as well regardless of their involvement,  

https://news.yahoo.com/boy-scouts-files-chapter-11-054911909.html

 

"Assets are separate — they’re going to make that argument, and we’re going to contest it," said Kosnoff, the attorney. "Under the bylaws of the Boy Scouts they have absolute control over the assets that may be titled to the council."

That quote is news to me.   The bylaws state that council property is transferred to national on dissolution of the council but there isn't anything about national having any direct control over the assets of the council (only that they be used for furthering scouting).  

[carebear3895]

48 minutes ago, Jameson76 said:

Where and why exactly are they flying "a lot"?  You have to be controlling of expenses.  Running a business 101

well, the ScoutingU staff flies all over the country for advance Pro training and at least once a month to the Summit for Pro Basic training (which is a horrible, horrible waste of money and resources). It would suck to try and have a family (or even a personal life) if you work for ScoutingU. 

All 4 regions have their staffs based in Dallas, so they leave periodically to be in their regions and visit councils. I think Area Directors are based in Dallas too, but to be honest with you, I have no idea what they do. 

Edited February 18, 2020 by carebear3895

[Cburkhardt]

What a day, and what a couple of years it is going to be as we go through this.  By the way, thanks everyone for contributing to my recent postings.  Hope we came up with some good initiatives and tactics to use as we go forward.

Tort lawyers in the US are among the best advocates in the world.  The people arrayed against the BSA are very good and their obligation is to take the BSA down and take every penny, including selling the very last basketry merit badge stool kit in the warehouse. The technique to do this is to first take a run at killing the BSA outright.  This would be attempted by a vigorous PR campaign to further deamonize us to the point where we lose our membership, COs and donors at all levels, including councils.  If there is no organization left to operate, then there are no assets needed to be retained and the whole mass of assets is liquidated, including auctioning off the rights to the term “Eagle Scout”.  This would be a forced conversion to a Chapter 7.  Chances of success? Probably only 1/30, if that.

Their next-best technique is going to be to argue control issues — that councils and national are essentially one and the same.  This will be done through a sophisticated argument to capture the councils assets into the principal bankruptcy.  Look to an analysis that because National gets everything when it withdraws a council charter, that the judge — perhaps having power to order such a withdrawal — should do so now.  Withdraw the charters, collapse the assets into one pile, and the lawyers get their huge share.  Alternative control arguments will be made as well — they just are not as elegant sounding.  One alternative is to get bankruptcy permission to continue the state lawsuits against the councils on their own.  That is nicer for the lawyers, because they get a higher percentage fee and there is no liability discharge (allowing multiple future suits).  Finally, some councils might file a Ch. 11 on their own, or use the national Ch. 11 as a means through which they might settle and get a discharge.  The chance of some combination of these arguments working against a council that has some bad cases with horrible facts?  Maybe 1/3.

A council with no cases that is somehow “clean as a whistle” would fare much better.  Maybe chances of loss being 1/20.  However, the Tort lawyers only need one “iffy” case from the 40s in this environment to have leverage.

Where this drives me is that I believe smart Scouters in geographic territories might look to what council camp and office assets need to be retained to operate the BSA locally — and consider contributing the value of the unneeded propertied to the victims compensation trust.  The objective is to keep what is needed and get the discharge of liability.  We talked a bit on some earlier postings about downsizing and keeping only the best properties.  Places like 10-Mile, Goshen and Owasippe that are beautiful, can serve a large territory and cost less to operate.  That would be one of the ways we could accomplish something good in bankruptcy that we otherwise could not.

The councils who wish to be represented before the bankruptcy court with a separate and distinct voice are already preparing to do so under the leadership of preeminent bankruptcy council from the New York Councils.

This is going to be an historic bankruptcy.  New law will be made.  The only certainty is that the councils are indeed in the gunsights of the tort lawyers — and some of those councils have bad facts. 

Prediction:  Councils with bad facts will contribute and negotiate for a discharge.  Councils with good facts will contribute something in order to “buy” a discharge.  

 

[Cburkhardt]

Southern Region Downsizes Staff.  Retirements of the Region Director and 4 of the 8 Area Directors were announced today.  The remaining 4 Area Directors will now serve 2 Areas each.

[malraux]

1 hour ago, Cburkhardt said:

What a day, and what a couple of years it is going to be as we go through this.

Yeah, I’d offer to buy my DE an unscout-like beverage for getting through today, but she’s expecting, so it’s probably maximally inappropriate. 

Edited February 19, 2020 by RememberSchiff
clarity - capitalized de, hyphenated unscout like

[RememberSchiff]

 I wonder if the judge can apply executive compensation caps? 

[Eagle1993]

They listed HA values here:

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/799102_20.pdf

Northern Tier - $6.6M

Sea Base $16.7M

Philmont $40.1M

The Summit high adventure facility is in a separate legal entity, Arrow WV.  BSA has a note receivable due from Arrow.

The note due from Summit is $345M

So, total for HA bases = $408.4M out of total Assets of $1.01B

 

[Eagle1993]

21 minutes ago, RememberSchiff said:

 I wonder if the judge can apply executive compensation caps? 

From what I have seen, executive compensation actually increases during bankruptcies.  The reasoning is that to keep top talent during bankruptcy, you have to over pay.

[tnmule20]

6 minutes ago, Eagle1993 said:

They listed HA values here:

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/799102_20.pdf

 

Northern Tier - $6.6M

Sea Base $16.7M

Philmont $40.1M

The Summit high adventure facility is in a separate legal entity, Arrow WV.  BSA has a note receivable due from Arrow.

The note due from Summit is $345M

So, total for HA bases = $408.4M out of total Assets of $1.01B

 

Then it looks like National is factoring in Council properties as total assets. 

[T2Eagle]

1 hour ago, Cburkhardt said:

This is going to be an historic bankruptcy.  New law will be made.  The only certainty is that the councils are indeed in the gunsights of the tort lawyers — and some of those councils have bad facts. 

Prediction:  Councils with bad facts will contribute and negotiate for a discharge.  Councils with good facts will contribute something in order to “buy” a discharge.  

As near as I can tell, although it's always initially challenged, the idea that each diocese in the US is a separate entity and not a part of a greater whole has held up through 20 or so diocesan bankruptcies, so to the extent that's a parallel most local councils should be able to stay out of this.  The councils that are going to be in trouble  are not so much those with bad facts as much as it is the councils in those states where they have made the recent statute of limitations changes.  I doubt it is in anyone's interest to litigate this all the way through a trial and appeals process, so likely a settlement will come after a couple years of preliminary litigation and negotiation.

[Eagle1993]

1 minute ago, tnmule20 said:

Then it looks like National is factoring in Council properties as total assets. 

They are not, New York State council assets alone are over $100M https://www.usatoday.com/in-depth/news/investigations/2020/02/18/boy-scouts-bsa-chapter-11-bankruptcy-sexual-abuse-cases/1301187001/

 

National Assets:  

High Adventure Bases (including loan due from Summit) = $408M

Cash (some restricted) = $186M

General Investments & Order of Arrow = $200M

Texas Building & National Supply = $7M

Furniture & Equipment = $30M

Receivables = $23.6M

Pledge Receiveables = $66M

Inventory = $68M (that is a lot of Scout shirts)

Prepaid Charges = $22M

Other Assets = $14M

Interfund Receiv = -$10M

= $1.014B of assets … out of the above, what can they use for the victim's fund? What is the size of the victim's fund?  $408M of HA bases is going to be the juicy target.

 

 

[Liz]

Our Council made it very clear in a letter sent out today that their assets are entirely separate from National. 

I suppose any Council could also be named in a suit, but each Council is its own legal and financial entity, and not financially responsible for the actions of Scouters in other councils. 

[tnmule20]

14 minutes ago, Eagle1993 said:

They are not, New York State council assets alone are over $100M https://www.usatoday.com/in-depth/news/investigations/2020/02/18/boy-scouts-bsa-chapter-11-bankruptcy-sexual-abuse-cases/1301187001/

 

National Assets:  

High Adventure Bases (including loan due from Summit) = $408M

Cash (some restricted) = $186M

General Investments & Order of Arrow = $200M

Texas Building & National Supply = $7M

Furniture & Equipment = $30M

Receivables = $23.6M

Pledge Receiveables = $66M

Inventory = $68M (that is a lot of Scout shirts)

Prepaid Charges = $22M

Other Assets = $14M

Interfund Receiv = -$10M

= $1.014B of assets … out of the above, what can they use for the victim's fund? What is the size of the victim's fund?  $408M of HA bases is going to be the juicy target.

 

 

Ok. Wow. Above my pay grade as a volunteer. 

[Cburkhardt]

T2Eagle:  Are they comparing the diocese to the national conference of Catholic bishops?  The diocese-conference link would be weak in comparison to the council-national link.