Chapter 11 announced

[ThenNow]

8 minutes ago, CynicalScouter said:

Philmont did, yes. I can recall seeing an appearance sheet and notice.

Right. I recall now. Thanks to both of you for the prompt. This reinforces the negative inference: the absence of any notices of appearance and/or a reservations of rights reveals the that ain't no "there there," I'm thinkin'.

Edited March 5, 2021 by ThenNow

[CynicalScouter]

14 minutes ago, ParkMan said:

It very much strikes me that the LC are separate - though the BSA's need for brand control and uniformity makes it seem that they are not

The point is however the National charters these LCs, sets the Rules and Regulations and is the receiver for any/all assets should the LC disband. National reserves the right under the Charter and Rules and Regulations to audit, restrict, and direct LCs at National's will or whim

The plaintiffs argument is that given the above, that LCs are NOT independent (although they may exercise a great deal of autonomy).

Let's see what the judge says.

[T2Eagle]

In order for BSA to demonstrate that two thirds of its assets are restricted and unavailable to creditors they would need to have been incredibly disciplined in their accounting and bookkeeping over the past century to make sure there was no comingling of the various funds and properties.  This is not a habit of mind that I've seen them exhibit in any other sphere of their behavior.

I have always thought that one of their weaknesses of BSA as an organization is that virtually everyone in the organization has come up through the ranks and so there is little opportunity for new ideas or dissent.  This leads to folks mistakenly believing that "the way we do things is unquestionably the right way to do things".  When you almost never bring in people from other organizations with other experiences you eliminate any other perspectives.

I would take the over on the out of bankruptcy by August.  I can't see that two thirds figure standing.

[ThenNow]

4 minutes ago, CynicalScouter said:

The point is however the National charters these LCs, sets the Rules and Regulations and is the receiver for any/all assets should the LC disband. National reserves the right under the Charter and Rules and Regulations to audit, restrict, and direct LCs at National's will or whim

The plaintiffs argument is that given the above, that LCs are NOT independent (although they may exercise a great deal of autonomy).

Not knowing a ton about franchises, I have looked at this more like the employee vs. independent contractor scenario, which is more familiar to me and provides a number of boxes to check to see which is which. The BSA and LC's want to say these are completely "independent contractors" who do their own thing, not sufficiently directed and dictated to by National to be deemed an "employee." I know this is apple to oranges, but bear with me.

When you do a test of employee or indie contractor, you look at the factors of control, autonomy and influence on behavior and the overall relationship. The IRS has a 20 Factor Test, with three categories under which the points are sorted: Financial Control, Behavioral Control and Relationship of the Parties. To avoid applying all the factors, which is not the test one would use for this relationship anyway though I found it helpful, I just can't see how the LC's could be ruled independent, legally autonomous and "uncontrolled" entities. The various and specific Charter Rules and Regulations, especially the rights to subsume assets upon disbanding, do not bode well for a finding of independence. I'm not saying this as a claimant, just trying to look at it as objectively as I can.

We shall see, indeed.

[Eagle1993]

 

7 minutes ago, ThenNow said:

The various and specific Charter Rules and Regulations, especially the rights to subsume assets upon disbanding, do not bode well for a finding of independence. I'm not saying this as a claimant, just trying to look at it as objectively as I can.

I guess my question is about Catholic Dioceses.  They have been going through bankruptcy and treated separate.  Why wouldn't the same apply to LCs?

 

 

 

[ParkMan]

23 minutes ago, CynicalScouter said:

The point is however the National charters these LCs, sets the Rules and Regulations and is the receiver for any/all assets should the LC disband. National reserves the right under the Charter and Rules and Regulations to audit, restrict, and direct LCs at National's will or whim

The plaintiffs argument is that given the above, that LCs are NOT independent (although they may exercise a great deal of autonomy).

Let's see what the judge says.

Agreed - will be interesting to see what the judge says.

4 minutes ago, ThenNow said:

Not knowing a ton about franchises, I have looked at this more like the employee vs. independent contractor scenario, which is more familiar to me and provides a number of boxes to check to see which is which. The BSA and LC's want to say these are completely "independent contractors" who do their own thing, not sufficiently directed and dictated to by National to be deemed an "employee." I know this is apple to oranges, but bear with me.

When you do a test of employee or indie contractor, you look at the factors of control, autonomy and influence on behavior and the overall relationship. The IRS has a 20 Factor Test, with three categories under which the points are sorted: Financial Control, Behavioral Control and Relationship of the Parties. To avoid applying all the factors, which is not the test one would use for this relationship anyway though I found it helpful, I just can't see how the LC's could be ruled independent, legally autonomous and "uncontrolled" entities. The various and specific Charter Rules and Regulations, especially the rights to subsume assets upon disbanding, do not bode well for a finding of independence. I'm not saying this as a claimant, just trying to look at it as objectively as I can.

We shall see, indeed.

Without going too far into a tangent, there are two other factors of why this is so muddled:

1) People tend to look at the actions of the employees and not the board.

The professionals are structed in a high autocratic model.  As such, the culture is one that drives employees to follow the instructions of the Scout Executive.  The SE's career path is dictated by national.  This drives a lot of uniformity in the professional ranks.  

The board, on the other hand, is more independent. 

2) It's a non-profit

It's without doubt that the board signs off on following some national policies too quickly - but it's really just because it's a non-profit and economics are not the driving factor.

 

I gather the legal definition never contemplated a case like this.  So to your point, while they are separate, they may not fit the legal definition.  I'd submit that the separate legal structure is there - but the professionals in the BSA have really confused it.

 

[ThenNow]

9 minutes ago, Eagle1993 said:

I guess my question is about Catholic Dioceses.  They have been going through bankruptcy and treated separate.  Why wouldn't the same apply to LCs?

I have a vague recollection about this somewhere in my little brain. In those cases, an individual Diocese effectively equates to BSA National in this case. The RCC suits aren't against the local churches, though many are named I believe, because they don't have the big dollar assets. The local churches are more like Troops/Units. I don't believe there is a "RCC of the USA" or otherwise, in terms of a legal entity. The Vatican is a sovereign state and not reachable. 

[CynicalScouter]

18 minutes ago, Eagle1993 said:

I guess my question is about Catholic Dioceses.  They have been going through bankruptcy and treated separate.  Why wouldn't the same apply to LCs?

There was a LOT of legal argument over this, including trying to sue Pope Francis, but the short version is this:

1) Dioceses are both INDEPENDENT and AUTONOMOUS from the Vatican.

2) Dioceses are both INDEPENDENT and AUTONOMOUS from each other.

3) Even if you are able to jump over hurdle #1, the Vatican, as a separate international entity and government, is not touchable for any of this either due to international law in general or the Foreign Sovereign Immunities Act in particular.

So, each Diocese was out there, on its own.

In some ways it looks like BSA but for one thing: how much does National control and direct Council operations, rules, and practices?

Plaintiffs are going to do everything to say the LCs are neither independent nor autonomous.

BSA is going to do everything to say the LCs are both independent and autonomous.

Edited March 5, 2021 by CynicalScouter

[Eagle1993]

6 minutes ago, ParkMan said:

I'd submit that the separate legal structure is there - but the professionals in the BSA have really confused it.

I'll also state that having separate LLCs does not mean they are necessarily separate.  For example, my company has 100s of LLCs ... but if my company went bankrupt, they wouldn't be able to say certain LLCs are not bankrupt as they are 1 corp.

Given that, I do wonder what is the legal framework.  I think the financial side is concerning.  For example, can a council leave BSA, take the council assets and join a different scouting organization?  Lets say BPSA ramps up and my council takes its camps, employees and assets and redeploys them to generate BPSA units.  Is that allowed?

 If you equate this to the franchise model ... owners of franchises can clearly take their profits/assets they own from one franchise business and use it for other, different franchises.  I've seen this when an owner left a Quiznos to open up a Subway.  This is where the franchise model gets murky in BSA as I don't believe councils have the ability to keep all of their assets (post rebranding).  Is that enough to not call them legally separate, I'm not sure.

[ThenNow]

4 minutes ago, CynicalScouter said:

There was a LOT of legal argument over this, including trying to sue Pope Francis, but the short version is this:

1) Dioceses are both INDEPENDENT and AUTONOMOUS from the Vatican.

2) Dioceses are both INDEPENDENT and AUTONOMOUS from each other.

3) Even if you are able to jump over hurdle #1, the Vatican, as a separate international entity and government, is not touchable for any of this either due to international law in general or the Foreign Sovereign Immunities Act in particular.

So, each Diocese was out there, on its own.

In some ways it looks like BSA but for one thing: how much does National control and direct Council operations, rules, and practices?

Plaintiffs are going to do everything to say the LCs are neither independent nor autonomous.

BSA is going to do everything to say the LCs are both independent and autonomous.

Yeah. What he said. (I already loosened the lid, he just took it off...)

[T2Eagle]

The control of local councils is very complicated.  As far as i can tell if it went all the way to trial it would be a "matter of first impression" meaning it's the first time that particular interpretation of the law came before a court.

The councils are unquestionably independently owned and operated corporations that exist as entities established within each state's laws governing corporations.  They have their own boards, corporate by laws, legal obligations, etc.  The reversionary interest national has in the councils' properties comes from their ability to confer or revoke charters.  Essentially, each year's charter agreement says that if a council disbands or has its charter revoked then the council's assets are turned over to national.  The language has changed over the years and so it would be an open question whether the current iteration really means that all the property that a council owns has to be given to national --- is that really what both parties understood and agreed to.  Just as importantly, the method for exercising that control is vague. 

There would be lots of questions about what obligations national has in revoking a charter, would they be acting in good faith if a council was following all the rules and regulations and national decided it wanted to revoke "just because".  And let's say it does try that option.  First, national would have to actually do it.  Presumably they would only do it under a court order, tricky in itself because  ordering  BSA to end scouting in say NYC would be a really big lift to be justified under bankruptcy since there's no guarantee the NY council would go along, and no guarantee there would be a way to continue scouting in their absence.  Then you have to look at what happens if national does demand from each council: "pay us x millions or else."  Councils have other people they owe money to, and other parties who have an interest in their operations and properties, and so each LC could themselves end up declaring bankruptcy, with BSA being just one of many creditors in 300 separate bankruptcy proceedings.

So, super complicated, years worth of litigation, with probably different courts giving different opinions, all of which could be protracted out to the appellate level.

This almost has to end in a settlement, because the time and cost of full litigation is otherwise just too destructive to both side's interests.  

[TAHAWK]

LIMA — The national Boy Scouts of America might be facing tough financial decisions in the coming weeks. That doesn’t mean the local organization, the Black Swamp Area Council, is in trouble, though.

Sherri Garner Brumbaugh, council president for the Black Swamp Area Council, and Marc Kogan, scout executive, sent a letter out Friday afternoon to ease donors’ concerns about the strength of the local scouting organization.

“Charitable support of the Black Swamp Area Council stays local,” according to the letter. “All assets of the Black Swamp Area Council, including past and future charitable contributions, unit accounts, endowment funds, and properties, are independently held and protected. Dollars given locally in support of Scouting stay right here in the Black Swamp Area Council.”

On Wednesday, the national organization acknowledged it would explore “all options,” including possible bankruptcy protection, to stay afloat while facing sexual abuse lawsuits and dwindling membership at the national level.

Scouting’s organization protects the local assets from the national organization. The Black Swamp Area Council is its own 501(c)(3) nonprofit, which owns Camp Lakota, Camp Berry and Findlay Service Center. The Lima Service Center is leased from the Lima Fraternal Order of Police.

The local organization doesn’t receive money from the national organization, according to the letter.

“The Black Swamp Area Council receives no funding from the National Council, BSA; in fact, we pay fees to National Council, BSA as a part of our charter agreement for specific services,” according to the letter. “We receive value backfrom the National Council, BSA, but we operate as a financially independent not-for-profit organization.”

 

SOURCE: https://www.limaohio.com/news/332662/local-scouts-finances-separate-from-national-organization

[CynicalScouter]

3 minutes ago, TAHAWK said:

“Charitable support of the Black Swamp Area Council stays local,” according to the letter. “All assets of the Black Swamp Area Council, including past and future charitable contributions, unit accounts, endowment funds, and properties, are independently held and protected. Dollars given locally in support of Scouting stay right here in the Black Swamp Area Council.”

I would simply add...

For now.

This really does make me think there are a LOT of councils who are going to roll the dice and not participate in the bankruptcy in the hope that their statutes of limitations never get reopened.

[ThenNow]

37 minutes ago, CynicalScouter said:

This really does make me think there are a LOT of councils who are going to roll the dice and not participate in the bankruptcy in the hope that their statutes of limitations never get reopened.

I've been thinking that for a while and asked others involved in the case why some LC's, who don't sense a legitimate "threat" to their asset base, would submit to voluntary surrender. The answer is as you stated, plus the BSA wants unanimity in order to be "one and done for all." I still didn't like that answer, because I can see it from a LC's viewpoint.

If I were risk officer or any officer of a LC, I would know: exactly which legislators and groups are interested in SoL reform; the substance of all bills proposed, when and by whom; the disposition of each with votes cast;" what's going to be proposed; which committee(s) and chairpersons wield control; and so on. Going into this, I would've had a clear sense of the likelihood of seeing a VRA passed in my state. It's an inestimable threat and I can't imagine not having been keenly aware of its every move and machination. Then again, I have the luxury of distance and no need to battle the day to day effort to plug holes in the boat and keep programs afloat. (Another brief poem.) 

When I survey the map of "closed states," even considering those with pending Victims Rights Act legislation, many of them have legislatures controlled by BSA and/or RCC-inclined Members. Some of these pieces of legislation have come up years in succession, only to die in committee. I know one state has the legislation parked in a committee controlled by a Representative who is Catholic and involved in Scouting. I am not saying that necessarily inclines him to vote against the legislation, but as a matter of fact he is vehemently opposed.

All that said, as I mentioned several days ago, the current political climate, coupled with the way the claimant side is reacting to the Plan and the amplification of it in the press, I think some VRA legislation could be dislodged in the wake of the case. Maybe. Those who feel totally safe today, may not be in the not too distant future.

Edited March 5, 2021 by ThenNow

[T2Eagle]

I live in Ohio.  For something like the VRA to pass would take a massive change in the political landscape.  Just a few years ago we tightened SOL rules for even basic contract cases.  For a state like Texas the shift would have to be even larger.

The incentive to pay to settle, and I know my council anticipates that as a very real possibility, is that the current situation is bad for everyone, it's always worth some money to reduce uncertainty and this could act as an insurance policy against VRA laws, keeping your own assets at the cost of BSA going down in flames is pennywise pound foolish, and as I outlined above being independent is not entirely settled so even winning that argument could cost you as much as you're going to be asked to pony up now.

The statement TAH posted above certainly lays out the view that the councils want to have, but it's not any kind of new or renewed stance that you can read anything into.  It's from two years ago and mirrored what pretty much every other council stated at that time.