Chapter 11 announced

[CynicalScouter]

31 minutes ago, RememberSchiff said:

All good points. Another question, the amount our insurers will contribute to victims fund.

The insurers are going to pay $0; they insist that the insurance policies are void because National failed to disclose to the insurance companies/were not forthright.
 

Quote

 

The Hartford Accident and Indemnity Co. and First State Insurance Co. in Texas have both turned their back on the BSA, arguing that the “ineligible volunteer files” show the organization hasn’t done enough to protect children against sexual abuse and misconduct, and hasn’t done enough to warn parents of the risks.

Both insurers are arguing in court that they shouldn’t have to pay claims related to abuse that the BSA could have reasonably prevented. The BSA and several councils sued both insurers for $13.5 million in June. In a separate legal battle, insurers are refusing to cover sex-abuse settlements and legal defense fees for the BSA, arguing that the events were not accidents and could have been prevented.

 

 

[David CO]

2 hours ago, CynicalScouter said:

I would assume the following: a Victims Fund that a) has a lump sum dropped in on a date in 2021 and b) continual annual payments for XX years into that fund.

I wouldn't assume that the national and local councils will survive the bankruptcy.  I don't think the lawyers will either.  They will want the Victims Fund to have tangible assets.  An agreement to contribute to a fund sometime in the future won't do it.

Edited July 10, 2020 by David CO

[CynicalScouter]

13 minutes ago, David CO said:

I wouldn't assume that the national and local councils will survive the bankruptcy.  I don't think the lawyers will either.  They will want the Victims Fund to have tangible assets.  An agreement to contribute to a fund sometime in the future won't do it.

1) The Victim's Fund is collateralize with tangible assets. They don't pay into the victim's fund, they seize the asset. This is, in effect, what happened with the Tobacco Master Settlement agreement.

2) Plaintiffs lawyers (or some of them) may want mass liquidation of National and all 250+ councils (up to and including returning the original charter to Congress), I cannot see a bankruptcy judge agreeing to such a plan.

[RememberSchiff]

Century Indemnity Company seeks to appeal Bankruptcy Court decision to allow retention of Sidley Austin, main attorneys for BSA, and elects for their appeal to be heard in US District Court and not by Bankruptcy Appellate Panel.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/832910_1010.pdf

Edited July 14, 2020 by RememberSchiff

[Eagle1993]

On 7/10/2020 at 11:19 AM, David CO said:

I wouldn't assume that the national and local councils will survive the bankruptcy.  I don't think the lawyers will either.  They will want the Victims Fund to have tangible assets.  An agreement to contribute to a fund sometime in the future won't do it.

When I heard 10,000 plaintiffs I begin to wonder if this goes Chapter 7 vs 11.  If Chapter 11 results in a settlement that is too low, I wonder if the judge is able to push this into Chapter 7 and liquidate everything.  I hope not … but that number was large and scary.  Perhaps that was the point to push for a large settlement.

[RememberSchiff]

 Motion to dissolve inactive non-debtor subsidiaries NewWorld19, LLC and Texas BSA, LLC. Note statement 2019 World Scout Jamboree expenses exceeded revenues by approximately $2,878,000.

page 3:

6. As described in the First Day Declaration, BSA has several subsidiaries. Two of these subsidiaries, NewWorld and Texas BSA, had no operations or assets as of the Petition Date and remain inactive as of the date hereof:

NewWorld19. BSA is the sole member of NewWorld, a non-profit limited liability company incorporated under the laws of Texas on October 12, 2015. NewWorld was formed to sponsor, organize and host the 2019 World Scout Jamboree. Under the terms of NewWorld’s operating agreement, BSA paid all of the expenses of planning and operating the 2019 World Scout Jamboree and was entitled to the revenues derived from the 2019 World Scout Jamboree. Ultimately, the expenses of the 2019 World Scout Jamboree exceeded revenues by approximately $2,878,000. (see docket 375) BSA will write off this loss in connection with the dissolution of NewWorld. NewWorld has no assets or operations.

Texas BSA, LLC. BSA is the sole member of Texas BSA, a non-profit limited liability company incorporated under the laws of Texas on July 12, 2019. Texas BSA has never had any assets, liabilities or operations other than holding approximately $10,000 of cash which was contributed by and will be returned to BSA.

7. BSA no longer has any need to maintain NewWorld or Texas BSA as subsidiaries because they provide no benefit to the Debtors or the mission of Scouting. Other than as set forth above, neither New World nor Texas BSA has any ongoing operations or assets, and the Debtors do not anticipate that either entity will have any operations or assets in the future. NewWorld and Texas BSA are required to pay costs associated with ongoing state registration fees, franchise taxes, and related reporting requirements for limited liability corporations in the ordinary course. Moreover, the Debtors are required to prepare and file periodic reports for NewWorld and Texas BSA under Bankruptcy Rule 2015.3. The Debtors are requesting authority to dissolve NewWorld and Texas BSA to avoid unnecessarily incurring any such costs or expenses going forward.

 

Motion to dissolve inactive, non-debtor subsidiaries, NewWorld19, LLC and Texas BSA, LLC:

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/833702_1022.pdf

08/03/2020 Update: Motion granted.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/837403_1063.pdf

 

Edited August 9, 2020 by RememberSchiff
Motion granted

[thrifty]

can someone explain to me how BSA would have lost $2.8m on WSJ?  This isnt sarcasm, I'd really like someone more knowledgeable to theorize or speculate on this for me.  We went for the day, it was nice.  I didnt see anything I would call lavish.  They already have the land and unpaid volunteers.  Every attendee paid a lot to be there.  Not enough attendance to meet estimated goals?  Wasnt it bigger than previous WSJs?  Anyone know of unplanned expenses BSA encountered such as security or something?

[RememberSchiff]

15 hours ago, thrifty said:

can someone explain to me how BSA would have lost $2.8m on WSJ?  This isnt sarcasm, I'd really like someone more knowledgeable to theorize or speculate on this for me.  We went for the day, it was nice.  I didnt see anything I would call lavish.  They already have the land and unpaid volunteers.  Every attendee paid a lot to be there.  Not enough attendance to meet estimated goals?  Wasnt it bigger than previous WSJs?  Anyone know of unplanned expenses BSA encountered such as security or something?

My read, NewWorld19 LLC lost $2.8M but the BSA ( a manager, current agent, and registrant of NewWorld 19 in Texas) of is on the hook for it and not the other hosts and managers of NewWorld19, Canada and Mexico. "Under the terms of NewWorld’s operating agreement, BSA paid all of the expenses of planning and operating the 2019 World Scout Jamboree and was entitled to the revenues derived from the 2019 World Scout Jamboree."

Dec 20, 2018: It is important to note that the three co-hosting National Scout Organizations (Scouts of Mexico, Scouts Canada and Boy Scouts of America) took the decision 3 years ago to establish a separate legal entity for the Jamboree, known as “NewWorld19, LLC”, which operates separately from all the co-hosts of the event.   

https://www.2019wsj.org/statement-from-the-organizing-committee-of-the-24th-world-scout-jamboree/   

I found the the  2019 WSJ Final report  below and nowhere else. Compare its bewildering format and availability to previous World Jambo final reports. 

Anyway the answers you seek may be in there, good luck in your search.

https://issuu.com/carajas/docs/wsj_2019_final_report

Edited July 17, 2020 by RememberSchiff
business clarity

[RememberSchiff]

Found link below.  See pages 6 and 7, just a general breakdown but shows NewWorld19 Expenses at $55M and Revenues at $50M.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/812000_374.pdf

Edited July 17, 2020 by RememberSchiff

[CynicalScouter]

On 7/14/2020 at 4:52 PM, Eagle1993 said:

When I heard 10,000 plaintiffs I begin to wonder if this goes Chapter 7 vs 11.  If Chapter 11 results in a settlement that is too low, I wonder if the judge is able to push this into Chapter 7 and liquidate everything.  I hope not … but that number was large and scary.  Perhaps that was the point to push for a large settlement.

Yes, if push comes to shove the judge can convert but not simply because the settlement is too low but because the payments aren't being made OR because the debtor is acting in bad faith OR in the "best interests of creditors and the estate." 11 U.S. Code § 1112. Conversion or dismissal

 

Quote

“The Code does not define the phrase ‘best interests of creditors and the estate.’” 7
Collier on Bankruptcy ¶ 1112.04[7]. As a result, courts have indicated various reasons for
choosing conversion and rejecting dismissal. Courts have considered “prejudice to creditors” to
be a proper reason for a bankruptcy court’s refusal to dismiss a chapter 11 case. See id.; Matter
of Atlas Supply Corp., 857 F.2d 1061, 1063 (5th Cir. 1988) (“If dismissal would prejudice the
creditors, then it will ordinarily be denied.”). Misconduct of the debtor, i.e., debtor actions that
delay creditors’ ability to collect their claims or otherwise protect their interests, also warrants
conversion rather than dismissal. See In re Simmons, 200 F.3d 738, 743 (11th Cir. 2000)
(“When dismissal will only allow the Debtor to hinder creditors, secret[e] assets, and further the
Debtor’s abuse of the system, dismissal or her voluntary petition is not warranted.”); In re
Picacho Hills Utility Co., Inc., 518 B.R. 75, 80 (Bankr. N.M. 2014) (finding the need for a
“neutral, unbiased trustee” to investigate transfers favored conversion rather than dismissal); In
re FL. Invest. USA, Inc., No. 13-10814, 2013 WL 4039807, at *5 (Bankr. E.D. Cal. Aug. 7,
2013); see also 7 Collier on Bankruptcy ¶ 1112.04[7] (“In [choosing between conversion and
dismissal], the court may consider such factors as . . . whether the debtor had engaged in
misconduct and whether creditors are in need of a chapter 7 case to protect their interests.”).
Collier also lists “whether the debtor would simply file a further case upon dismissal” as a reason
to convert rather than dismiss. 7 Collier on Bankruptcy ¶ 1112.04[7].

EDIT: Additional reasons for (forced) conversion of a Chapter 11 to a Chapter 7. In re Costa Bonita Beach Resort, 513 B.R. 184, 200-01 (Bankr. D.P.R. 2014) (quoting Alan N. Resnick & Henry J. Sommer, 7 Collier on Bankruptcy ¶1112.04[7] (16th ed. 2011))

Quote

 (1) whether some creditors received preferential payments, and whether equality of distribution would be better served by conversion rather than dismissal;

(2) whether there would be a loss of rights granted in the case if it were dismissed rather than converted;

(3) whether the debtor would simply file a further case upon dismissal;

(4) the ability of the trustee in a chapter 7 case to reach assets for the benefit of the creditors;

(5) in assessing the interests of the estate, whether conversion or dismissal would maximize the estate's value as an economic enterprise;

(6) whether any remaining issues would be better resolved outside the bankruptcy forum;

(7) whether the estate consists of a "single asset;"

(8) whether the debtor had engaged in misconduct and whether creditors are in need of a chapter 7 case to protect their interests;

(9) whether a plan had been confirmed and whether any property remains in the estate to be administered; and

(10) whether the appointment of a trustee is desirable to supervise the estate and address possible environmental and safety concerns.

 

Edited July 17, 2020 by CynicalScouter

[CynicalScouter]

I will also say one more thing: Simply because SOME plaintiffs lawyers want to nuke Boy Scouts does NOT mean a) that is what ALL plaintiffs attorneys want and b) they can or will get a judge to sign off. There seems to be a misunderstanding that one particular plaintiffs attorney will get whatever he wants from the judge. That is simply not a given.

Moreover, as I pointed out, there is a presumption AGAINST forced conversion into a liquidation. Especially if they are trying to compensation to victims. I can see a situation where National and plaintiffs reach an agreement like the Tobacco Master Settlement Agreement where every year for the next 25 years National will deposit from its revenues a certain amount into a Victims Fund to pay out victims. Failure to make such a payment then converts from the Chapter 11 to the Chapter 7.

From a victim's perspective and the judge's, which would you rather have: 10 cents on the dollar TODAY (which is what they would get if they completely liquidated National) or 80-90 cents on the dollar over the course of the next, say, 20 years.

Edited July 17, 2020 by CynicalScouter

[David CO]

51 minutes ago, CynicalScouter said:

I can see a situation where National and plaintiffs reach an agreement like the Tobacco Master Settlement Agreement where every year for the next 25 years National will deposit from its revenues a certain amount into a Victims Fund to pay out victims.

A settlement like that makes a lot more sense for the tobacco companies than it would for BSA.  Some people will smoke regardless of the cost.  I don't think people will continue to join and support BSA if they know that they would be spending their hard-earned money (for the next 25 years) to pay off a lawsuit.  There are plenty of other youth activities available that aren't encumbered with long-term debt.

Edited July 17, 2020 by David CO

[CynicalScouter]

3 minutes ago, David CO said:

A settlement like that makes a lot more sense for the tobacco companies than it would for BSA.  Some people will smoke regardless of the cost.  I don't think people will continue to join and support BSA if they know that they would be spending their hard-earned money (for the next 25 years) to pay off a lawsuit.  There are plenty of other youth activities available that aren't encumbered with long-term debt.

If true, and I think you may be right, then plaintiffs lawyers are back to plan #1: take 10 cents on the dollar today.

I still believe in the end National limps away from this and is not liquidated but is simply a shadow of itself with minimal staffing and barely any real support. Everything shifts to the Councils which creates a whole other mess but that's another story.

[DavidLeeLambert]

54 minutes ago, David CO said:

A settlement like that makes a lot more sense for the tobacco companies than it would for BSA.  Some people will smoke regardless of the cost.  I don't think people will continue to join and support BSA if they know that they would be spending their hard-earned money (for the next 25 years) to pay off a lawsuit.  There are plenty of other youth activities available that aren't encumbered with long-term debt.

As an adult member and former boy member, I won't completely rule out contributing to the victim compensation fund, one way or another. But it will really hang a weight around recruitment and retention.

BSA's own internal review identified 12,254 victims in the Ineligble Volunteer Files (cited in a Washigton Post article). MSU's settlement in the Larry Nassar case was a little over $1.5 million per victim. Back in 2007, the Diocese of Los Angeles settled with over 500 alleged victims for about $1.3 million per victim. So that could add up to (very roughly) $18 billion for a "market rate" total settlement fund.  Divide that by the number of currently active Scouts, and it's $8,788 settlement share per current youth member.  The BSA assets in complete liquidation wouldn't even be "10 cents on the dollar", more like 5 or 6 cents.

Since I have four kids in Scouting, that would be over $35,000 I'd have to pay off over the next 2 to 12 years to keep them in the program... less than my yearly salary, but enough for a decent new car, or a few really nice vacations, or a major home renovation, or one kid's tuition and room and board for a year at MSU, or all the kids' tuition for each to get an associate's degree at a community college.

But there's a long list of people who presumably benefited from the pre-YPT program more directly than I did, and more than my kids will, and it seems like they should be paying something toward any settlement, even though there's probably no actual legal way to pass the liability on to them now:

• Anyone who earned Eagle before 1989
• Anyone who was a professional Council or National Council employee before 1989
• Anyone who served on any level Committee (unit, district, council, national) before 1989
• Any parent who saved money that otherwise would have been spent on babysitters or fees to another youth organization's camps, by sending his or her boy to Scout Camp, before 1989
• Any boy who learned something from Scouting, or had a great time while participating, before 1989
• Any organization or community member who accepted volunteer labor from Scouts, before 1989
• And of course the Scoutmasters and other volunteers who actually committed or covered up the abuse

Then again, all of those people are older than me, many are probably deceased, and some may themselves have been victims.

[Momleader]

Why should anyone who was a youth in prior to 1989 (Say 1981-87) have any liability at all!  Why punish them with liability?