Chapter 11 announced - Part 3 - BSA's Toggle Plan

[elitts]

I'm going to put on my "Moderator" hat here for a second:

Directly responding to another member is acceptable and a desirable part of this medium.  I even understand that at times, emotions will peak and there might be a response that includes some sarcasm, snark, criticism or even anger; however, responses MUST move the conversation forward. 

If you find yourself writing a response that includes some of those "negative" feelings, I ask you to do two things.  First, wait a few minutes after typing before you post, then re-read your writing and make sure it really reflects what you want to say. Second, make sure that you explain yourself and the reasons for your response and if applicable, provide an opposing view to the comment you object to.  If you can't be bothered to explain why you think someone said something foolish, then you have no business posting a comment solely as some sort of a text based eye-roll.  Just stick with a reaction instead.

ALSO,

Let's avoid discussions about other members as it is very easy for things to become "un-Scoutlike" quickly.  If you have something to say about their viewpoint or general outlook that is relevant to the topic, fine, but we don't want such things to devolve into a back-and-forth regarding a member rather than the topic.

And with that, I'm taking the hat back off again. 

[elitts]

On 4/29/2021 at 12:34 PM, 5thGenTexan said:

Do attorneys get paid by the word?  😀   I just give up trying to read it.

Pretty much, they get paid by the minute and are usually evaluated by the billable hours they pull in, so you can see how "concise writers" isn't really what law firm HR departments are shopping for.   Not to mention if they made things understandable to a lay-person, they'd be arguing for their own obsolescence.

[CynicalScouter]

Recently posted to a scouting FB group, a letter from a lawfirm representing some of the abuse victims. I was unaware of the mediation set for next week.

 

To our clients:

 

We apologize for the lack of a recent update. The judge recently delayed ruling on the Boy Scouts proposed plan and disclosure statement until May 19th. The Boy Scouts, in the meantime, filed two key documents. First, it filed a revised disclosure statement in which it provided additional details about a proposed settlement and trust. Second, it filed a revised plan of re-organization that contained two options: 1) A BSA-only settlement; 2) a globally proposed settlement. We expect the plan to be further revised in the future. If it remains in this form (with two choices), you will have the option to vote in favor of one option or another or against both option.

 

A BSA-only settlement is difficult for all involved because it would only recover approximately $150 million from the BSA and leave the remaining litigation to return to individual cases in state court to proceed against Local Councils and sponsoring organizations. This means, essentially, that victims would recover very little initially but also that Local Councils, Charter Organizations, and insurance companies would be left to defend tens of thousands of lawsuits. We believe BSA filed this option to use as leverage to obtain more contribution from Councils and insurance companies.

 

The second option - a “global option” - indicated that Local Councils would contribute $425 million towards a settlement and BSA would contribute approximately $150 million towards a settlement. It would also assign all insurance rights (which are valuable and range in the billions) to a Trust for further insurance litigation. It is likely that many insurance companies will settle and contribute to the victim fund. It is also likely that some will hold out, requiring litigation.

 

We will be objecting to the Boy Scouts disclosure statement because we believe it lacks many details necessary for victims to make a decision about whether to vote in favor of or against BSA’s proposed plan. For example, the current disclosure statement has no information about how much money a specific Local Council is contributing to the settlement.

 

The parties are all still working very hard towards a resolution. The Tort Claimants Committee - a Committee we participate in extensively as counsel for one of its members - sent demands to many insurance companies in the last month. You may have heard about a BSA settlement with The Hartford insurance company in the amount of $650 million. We believe this grossly undervalues Hartford’s liability and will be objecting to this settlement. We expect Hartford will increase its offer.

We know it is hard to wait for a resolution in this case. We expect that the voting on the plan will occur late this summer. Whether the parties can reach a global resolution of the bankruptcy by then remains to be seen.

 

Finally, the parties have scheduled three additional days of mediation next week in New York. We can provide you with a further update after that mediation.

[CynicalScouter]

50 minutes ago, elitts said:

Not to mention if they made things understandable to a lay-person, they'd be arguing for their own obsolescence.

It always amazes me that people do this. Yes, the law has its own jargon and uses language among lawyers that is, from an external perspective, utter gibberish.

And yet doctors and other professions have their own arcane language. Don't hear a peep about that.

Moreover, law is much more complex and varied. If, to take the medical example, if I were to say "obstruction of the superior vena cava" that has a certain, precise, scientific meaning.

Law, however, usually does not use preciseness because it cannot. Our much vaunted U.S. Constitution is an utter mess in this regard. Consider:

Quote

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated

Nowhere is there a precise, scientific definition for, pretty much, any of those words (what the heck are included in "effects"? And what is "unreasonable"?)

So, in the absence of clear, specific, scientific language of particular phenomena, you get, words, words, words.

Edited May 2, 2021 by CynicalScouter

[CynicalScouter]

I still cannot get over this. I mean, all that the BSA has to do is turn over some financial statements regarding Summit to the court and TCC for review as to whether or not the JP Morgan note is legitimate or not.

I remain convinced it is either a) fraudulent or b) legit but would show that Summit is such a massive sink hole of money that it would be a shocking embarrassment. And based on the latest news reports, it is likely BOTH.

Boy Scouts Say Tort Claimants Can't Challenge $350M Note

Quote

According to court papers, Arrow was formed in 2009 to purchase and develop land in West Virginia for what the BSA called a "high adventure" camp. According to the papers, the purchase and development was funded with notes and credit facilities issued between 2010 and 2019 and that the BSA currently holds a $350 million promissory note from Arrow.

The committee said the debt should be recharacterized as a cash or equity contribution to Arrow — arguing that among other things the intercompany note has no interest and no payments due before maturity — rendering the liens asserted against the camp by the BSA's prepetition lenders invalid.

They also argued that as the note is only secured by the property, the BSA did not receive a fair return for the bargain and that any payments to Arrow can be clawed back as fraudulent transfers.

So, there's the fraud. Now, here's the embarrassing sink hole of money.

Quote

It [BSA's Objection] also argued that the BSA received equivalent value, saying that while the West Virginia property is currently only valued at $42.8 million, that does not include the improvements made to the property or the value of the BSA's exclusive right to use the camp.

Let that sink in for a second. BSA is claiming that, with respect to Summit

$350 million (promissory note) - $42.8 (Summit's value) = $307.2 million in improvements and equity.

Everyone, boys and girls, raise your hands if you really, really thing that there are $300+ million in improvements and equity in Summit right now. Anyone?

Yeah, so as I said: a double scoop. Fraud AND gross financial mismanagement/sending money down a sink hole.

But BSA's prepared to spend tens of thousands (if not hundreds of thousands) to be absolutely sure that nether the federal judge NOR the sexual abuse victims EVER get a chance to look at the books on this one.

And yet people will sit here and continue to defend BSA, unquestioningly, unequivocally, and without hesitation. BSA can do no wrong.

I mean, put aside the sexual abuse claims here for a second, doesn't anyone find it ridiculously suspicious they are going out of their way to NOT allow this information out? I mean, for those of you who donated and made money, or had your children make money for this (my kids stood in the shivering cold on more than one occasion selling overpriced popcorn), doesn't it concern you in the least that Summit is this much of a disaster?

Edited May 3, 2021 by CynicalScouter

[ThenNow]

13 hours ago, CynicalScouter said:

It always amazes me that people do this. Yes, the law has its own jargon and uses language among lawyers that is, from an external perspective, utter gibberish.

As one of the guilty, I love this line of friendly jesting and mockery. Regardless the historic basis and reasons, our use of language can be absurd in its lack of clarity and accessibility. I believe that was the initial poke, as well as an admission of a lack of patience and understanding of legal gibberish. It was a poke at us and himself. Jolly good humor, I say.

While working in legal affairs for an entertainment company, I got in trouble for redrafting a series of agreements to make them understandable to the artists forced to sign them. It was one of my proudest moments as an attorney.  

[gpurlee]

The future of the national high adventure bases in the bankruptcy proceedings has been a repeated topic. The newest base, the Summit was planned as a cornerstone to an effort to stem the membership decline and to attract a new generation of Scouts. It was envisioned as “Disney World for Scouts” that would have the impact in the 21^st Century that Philmont had in the 20^th Century. It would be a blend of high adventure, state of the art facilities and technology. The Summit would become the permanent host site for the national jamboree and would have the capability to host the world jamboree. It would hopefully allow the BSA to recapture positive messaging at a time when the organization was under increasing criticism. The site was selected after the BSA had solicited proposals from dozens of states. The West Virginia site which was ultimately selected was located within a day’s drive of a vast section of the nation.

However, from Day One, the vision was under a shadow of doubt.

Although this Reuter’s article dates back to 2013, it helps to provide valuable background information to set the stage for the current controversy.

https://www.reuters.com/article/us-boyscouts-finances-specialreport-idUSBRE96E08B20130715

 “The Summit gives us the opportunity to reintroduce ourselves to America and raise $1 billion for the best youth development in the world,” says a slide from a June 2010 presentation on the project.

It isn’t panning out that way. Costs are rising. Initially budgeted at $176 million through 2013, the Summit’s cost is now estimated to reach at least $350 million by the end of this year and $439 million by the end of 2015, according to Scouts documents reviewed by Reuters. To keep up, the Scouts issued new bonds last year - more than doubling their previous borrowing for the project.

The Scouts’ efforts to pay for the Summit are off target, too. Internal financial updates show that the Scouts’ national organization, based in Irving, Texas, was $108 million behind its capital-raising goal for the Summit as of the end of March. That was 32 percent shy of its projection of $342.6 million.

 

Early on,  there were  BSA board officers who were troubled with the proposal and its implementation.

 

Last year, the Scouts drew up a financial plan to address rising Summit spending. A February 2012 internal memo from Boy Scouts president Wayne Perry advised senior Boy Scout executives that available cash from donations would be insufficient to cover the “cash burn” rate for the Summit.

 Some board members considered the project a potential white elephant whose cost could outweigh its usefulness, according to two people familiar with the matter. Rising spending soon became a concern for some.

 

Nevertheless, the article noted that despite the cash burn from the Summit project, the BSA was still in a strong financial position.

 

Despite its falling membership, the national Boy Scouts organization has a strong balance sheet. The Scouts could operate for nearly three years on their readily available funds alone, according to an analysis conducted for Reuters by Daniel Borochoff of charity-evaluation service CharityWatch.

 

As you read through the article, it is interesting to note the number of times that the writer states that BSA spokespersons declined to respond to questions or were evasive in their answers.

Edited May 3, 2021 by gpurlee

[Eagle1993]

3 minutes ago, gpurlee said:

 Some board members considered the project a potential white elephant whose cost could outweigh its usefulness, according to two people familiar with the matter. Rising spending soon became a concern for some.

The more I look at BSA financials and this case, I expect National doesn't have much money.

Summit was a financial disaster.  That has been documented in Scouter.com in multiple threads.  I really expect if they sold Summit, it wouldn't not pay off the debt assigned to it.  Who would spend hundreds of millions of dollars on a large campground in West Virginia?  BSA had major payments due in 2020 and 2022 that they haven't made.  We all question how they would ever make those payments.  I expect JP Morgan adjusted the payment schedule as they know the property would likely only fetch 10s of millions vs the hundreds that is owed.  BSA should walk from that property ... it is a white elephant that will continue to suck funds from BSA.  

I have scouts that went there, and they had a great time.  That said, BSA cannot afford it now or ever so why pretend.  I expect we can find solutions for National Jambos going forward.  We did for decades before we had Summit.

I think they should turn over Arrow WV to the Settlement Trust and let JP Morgan and the TCC fight it out.  

[CynicalScouter]

17 minutes ago, gpurlee said:

As you read through the article, it is interesting to note the number of times that the writer states that BSA spokespersons declined to respond to questions or were evasive in their answers.

Yep. Again, BSA is doing everything it can to NOT have the TCC and the bankruptcy judge look at the books on Summit and is literally spending tens if not hundreds of thousands in legal fees/billable hours to keep the TCC and the judge from seeing the books.

The only question I have is how much is 1) because the financial documents and loans associated with this boondoggle are fraudulent and 2) because Summit has been such a money pit that it would shock the conscious/enrage people.

Is that a 50/50 split? 70/30? Etc.

[CynicalScouter]

2 minutes ago, Eagle1993 said:

I expect JP Morgan adjusted the payment schedule

That's exactly what they did, per the filings made when BSA announced the deal they struck with JP Morgan back on March 1.

As I read it, BSA basically has to just pay interest-only for 2 years AND BSA has to get a $42.8 million loan from the BSA Foundation with a second lien by the BSA Foundation against Arrow, WV.

[vol_scouter]

2 minutes ago, CynicalScouter said:

Yep. Again, BSA is doing everything it can to NOT have the TCC and the bankruptcy judge look at the books on Summit and is literally spending tens if not hundreds of thousands in legal fees/billable hours to keep the TCC and the judge from seeing the books.

The only question I have is how much is 1) because the financial documents and loans associated with this boondoggle are fraudulent and 2) because Summit has been such a money pit that it would shock the conscious/enrage people.

Is that a 50/50 split? 70/30? Etc.

I truly doubt that number one has any validity as the people involved are honorable.  

The Summit has had more buildings and development after those articles were written.  

The valuation at $350 M has never made sense to me as the property as is would only appeal an organization such as the BSA and those cannot afford it.  The $42.8 M that the BSA quotes seems much more reasonable.

I suspect that the BSA fears that if any high adventure base is considered not to be core to the mission, then all will. 

Clearly, the BSA is following legal advice that could have to do with issues that none of us have considered.  

[CynicalScouter]

7 minutes ago, vol_scouter said:

I truly doubt that number one has any validity as the people involved are honorable.  

I see. 84,000 sexual abuse victims, and yet you remain 100% convinced BSA executives can do no wrong? Never hid information? By the way, as came out in the Oregon and other cases, there were actual written documents indicating BSA officials knew about the sexual abuse and did NOTHING to slow it down or stop it.

As Reagan said: trust, but verify. If BSA wants to be believed that they are not playing fraud games with the JP Morgan note, then produce the books to the federal judge.

Sunlight is the best disinfectant.

Edited May 3, 2021 by CynicalScouter

[vol_scouter]

7 minutes ago, CynicalScouter said:

That's exactly what they did, per the filings made when BSA announced the deal they struck with JP Morgan back on March 1.

As I read it, BSA basically has to just pay interest-only for 2 years AND BSA has to get a $42.8 million loan from the BSA Foundation with a second lien by the BSA Foundation against Arrow, WV.

The Reuters article said that as much as $429 M had been loaned to pay for the Summit.  Where did the money come from - a loan.  That loan has not been repaid.  Your argument has no validity unless you can explain where the BSA got such a large sum of money.  

[CynicalScouter]

4 minutes ago, vol_scouter said:

That loan has not been repaid. Your argument has no validity unless you can explain where the BSA got such a large sum of money.

That's what they need to explain to the judge. The burden is on the DEBTOR (in this case BSA) in a bankruptcy to account for ALL its financial doings.

PROVE it has not been repaid.

And yet, rather than allowing a federal judge to review the books on the Summit loans, they are fighting it tooth and claw.

What is BSA afraid of? That a federal judge is going to perhaps look at this, realize this is a shell game of fake debt and fraudulent notes, and a) end the bankruptcy (look up the principle of "unclean hands") and b) start making criminal referrals to the U.S. Attorney for Delaware?

Edited May 3, 2021 by CynicalScouter

[CynicalScouter]

17 minutes ago, vol_scouter said:

I suspect that the BSA fears that if any high adventure base is considered not to be core to the mission, then all will. 

That's a different legal argument.

1. One legal argument is that all HA bases are "core" to the BSA mission.
2. ANOTHER is that they are currently endebted to other creditors with a superior claim(s) therefore not part of the bankruptcy.

If, for example, Sea Base is 100% paid off, that addresses concern #2 (there are no other claimants with a superior claim to the sexual abuse survivors), but does NOT address #1.

And interestingly, BSA isn't arguing that Summit is a "core" function here. They are saying that NO ONE, not even a federal judge, can look at their financial records.

Seriously? Really? What is BSA hiding?

Edited May 3, 2021 by CynicalScouter