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

[ThenNow]

20 minutes ago, SilverPalm said:

If we can return to the Century whistleblower for a moment:

Wouldn't it be reasonable to pare down these supposed false claims now?  While the point was raised earlier that that wouldn't end up changing the lump sum of the settlement, it would impact the amount of award to each survivor.  The numerator doesn't change, but if the denominator gets smaller, you're left with a bigger award per survivor.

Isn't it in the best interests of both sides to weed out these allegedly false claims as soon as possible?

We know the insurers only want this so they have to pay less. That's a given. Once they start, how far does it go and by what standards of validity and review? It's supposed to be a somewhat facial review and not the type of deep dive vetting the Trustee will later due, which will be more thorough and substantive. It's the old "slippery slope" problem. Yes, the benefit could be mutual to the parties. Could. As a claimant, the thought of being diluted by fraud is painful. On one had, I don't want valid claims kicked for unsound reasons, caught up in a crusade to "purge the villains." On the other, I don't want invalid ones diluting and degrading the legitimate pool of victim/survivor claimants or impacting voting. I don't have an answer. Looking at the evidence Century is bringing causes me sorrow, if true and proven. Sad for the legal system. Sad for those who would do such things. Sad for the claimants. Sad for the BSA, too, but I feel a lot less sympathy there. 84,000 or 60,000? Know what I mean? Okay. No sympathy if it is ill-intentioned to impact voting.

Edited May 13, 2021 by ThenNow
Oops. Missed a spot.

[CynicalScouter]

26 minutes ago, SilverPalm said:

Isn't it in the best interests of both sides to weed out these allegedly false claims as soon as possible?

The key to bankruptcy is how much and when.

Trying to vet 84,000 claims will take months, years even. The insurers tried at once point to suggest getting documentary support from just 1000 claimants and taking testimony from 100, sort of sampling/precursor. That plan went no where and was vigorously opposed by TCC and attorneys for claimants.

So, yeah. Culling out the false claims NOW is great, except that BSA is kinda in a time crunch here.

[Eagle1993]

2 hours ago, Eagle1993 said:

I think this is a good point ...

One thing to remember, National BSA will walk away from this (given the current plan) in debt to JPM.  It appears, based on what I can see, the total debt BSA will own JPM is $222.2M (when you add up each of the categories).  It looks like that must be paid off in 10 years? ... I couldn't find a clear payment schedule.

That is over $2M per month (assuming a <4% interest rate).  With 1 million scouts, that is $24/year per scout. Now, there will be income from these properties ... but there is also maintenance, fees, salaries, etc. to support the property.  

I'll be interested to see BSA's business plan including how they pay off this mountain of debt if and when they leave bankruptcy.  

I'm going to follow up on this a bit.  The $222.2M is what BSA owes JPM after the bankruptcy (assuming I added up the numbers listed in the following document:

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/886292_2594.pdf

Now here is the interesting part.  I don't believe this includes the loan Arrow WV has with JPM.  Arrow WV owed JPM $323M at the end of 2018.  I'm guessing BSA, I mean Arrow WV, paid another $15M or so over the next two years (same paydown rate).  Lets say the paid $23M ... so Arrow WV has a $300M loan for Summit opened against JPM.

https://projects.propublica.org/nonprofits/organizations/270441319/201903199349303075/IRS990

So ... is the combined debt of Arrow WV & BSA $522.2M leaving bankruptcy?  

[BlueandSilverBear]

19 minutes ago, CynicalScouter said:

The key to bankruptcy is how much and when.

Trying to vet 84,000 claims will take months, years even. The insurers tried at once point to suggest getting documentary support from just 1000 claimants and taking testimony from 100, sort of sampling/precursor. That plan went no where and was vigorously opposed by TCC and attorneys for claimants.

So, yeah. Culling out the false claims NOW is great, except that BSA is kinda in a time crunch here.

Not that my opinion is worth anything, but here’s the way I see it...

A Scout is Loyal. 
 

We should be loyal to our brother Scouts who were abused under the auspices of the BSA.  They deserve some measure of restitution for what they suffered.

We should be loyal to the current Scouts who benefit from the program.  This will require creative solutions and a different program in some ways, but it’s understandable that many don’t want to lose what they consider to be key pieces.  Maybe they shouldn’t be expected to lose them to keep the program alive.

We should be loyal to those in the broader community who believed in Scouting and gave of their resources to make it what it is today.  

I don’t want to belittle anyone’s personal view on how to balance those loyalties. It’s an emotional task and I’m glad I don’t have to be the one to make the call. 

Edited May 13, 2021 by BlueandSilverBear

[CynicalScouter]

2 minutes ago, Eagle1993 said:

So ... is the combined debt of Arrow WV & BSA $522.2M leaving bankruptcy?  

The Boy Scouts of America Foundation has promised at a $42.8 million loan to provide operating cash post-bankruptcy. That is almost 2/3rds of the Foundations total worth $66 million.

Quote

A term loan from the National Boy Scouts of America Foundation (as defined in the Plan, the “Foundation”), in the principal amount of $42.8 million, which will be used by Reorganized BSA for working capital and general corporate purposes. This Foundation Loan will permit the Debtors to contribute to the Settlement Trust a substantial amount of consideration in Cash on the Effective Date.

 

[CynicalScouter]

1 minute ago, BlueandSilverBear said:

We should be loyal to the current Scouts who benefit from the program.  This will require creative solutions and a different program in some ways, but it’s understandable that many don’t want to lose what they consider to be key pieces.  Maybe they shouldn’t be expected to lose them to keep the program alive. We should be loyal to those in the broader community who believed in Scouting and gave of their resources to make it what it is today.  

Here's the problem: BSA was going to shrink anyway. I'm sorry, but the numbers don't lie. BSA membership was in free fall thanks to LDS leaving. Then COVID. The bankruptcy isn't helping, but even if it never happened, BSA's days of 2+ million youth are long gone and it will be lucky if it gets back above 1+ million anytime soon.

So, SOME of the sales and losses were going to happen.

So, are you losing you camp because of sexual abuse? Or because the council lost 70% of members? Etc.

But putting that aside, yes, it is a shame that some camps will be sold. But this is what is called in law a balance of equities.

1. Young people engaged in scouting is a good, both in its own right for the youth and the community as a whole. The judge has said she intends to have scouting continue its mission, and this is a Chapter 11, not Chapter 7 proceeding.
2. Compensating sexual abuse victims who it can be shown were abused in whole or in part due to BSA, Local Council, and/or Chartered Organization negligence is also a good.
3. From a public policy perspective, the legislatures of various states have chosen to reopen the statutes of limitations on these claims. The bankruptcy court is NOT being asked to strike down these laws and if it were, is unlikely to do so.

So, balance the equities. Given #3, what is fair?

1. One extreme: BSA and the Local Councils and the Chartered Organizations (along with their insurers) are untouched, the abuse victims get $0. Even BSA acknowledges that is not the right answer.
2. Other extreme: BSA is liquidated, all Local Council assets are seized and liquidated, and Chartered Organizations are left in financial ruin and the insurance companies are in their own Chapter 11s and Chapter 7s. That's not the right answer either.
3. Balance the equities: SOME BSA assets are gone. SOME Local Council assets are gone. SOME COs are going to have to pay. SOME insurance companies are going to pay. And we are back to the only real question in a bankruptcy proceeding: how much and when?

[fred8033]

1 hour ago, CynicalScouter said:

Sorta. The JP Morgan would have first dibs on it based on whatever loans/debt are on it. Then, if there's any value left, it would go into the Abuse Settlement or its value divided among ALL creditors with TCC/victims getting a fraction; that is TBD.

Ok.  So it would be liquidated by some organization or by BSA with agreement ... then the bankruptcy would portion out value across the creditors.  BSA handing over the summit to TCC is more rhetoric than process.  

[fred8033]

59 minutes ago, Eagle1993 said:

I'm going to follow up on this a bit.  The $222.2M is what BSA owes JPM after the bankruptcy (assuming I added up the numbers listed in the following document:

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/886292_2594.pdf

Now here is the interesting part.  I don't believe this includes the loan Arrow WV has with JPM.  Arrow WV owed JPM $323M at the end of 2018.  I'm guessing BSA, I mean Arrow WV, paid another $15M or so over the next two years (same paydown rate).  Lets say the paid $23M ... so Arrow WV has a $300M loan for Summit opened against JPM.

https://projects.propublica.org/nonprofits/organizations/270441319/201903199349303075/IRS990

So ... is the combined debt of Arrow WV & BSA $522.2M leaving bankruptcy?  

@Eagle1993 ... So what is the liquidation value of The Summit ?  I'm directly reading this as one creditor has the vast majority of the debt for that property.  I'm reading this as The Summit liquidation value could be less than $100 million if not far less.   Also, I'm assuming The Summit is a secured debt where the liquidation value would first pay the creditor secured by the debt.   
 

If SeaBase, Northern Tier and Philmont are about $60 million in value and The Summit has such high debt, BSA corporate land assets are much lower than I expected.  I expected the land assets to be $700M+, if not higher.  Now, I'm learning the value could be $100M or so.   A relative small amount of the bankruptcy.

@Eagle1993 ... is that right?

 

[fred8033]

56 minutes ago, CynicalScouter said:

 

3.  Balance the equities: SOME BSA assets are gone. SOME Local Council assets are gone. SOME COs are going to have to pay. SOME insurance companies are going to pay. And we are back to the only real question in a bankruptcy proceeding: how much and when?

Yep.  That is what we are talking about.   And the how much and when is not an automatic one hour discussion and done.  This will take months or years to resolve.  And if/when LCs and COs are pulled in, it's many more legal cases. 

This will be ugly for years. 

 

[CynicalScouter]

1 hour ago, fred8033 said:

BSA handing over the summit to TCC is more rhetoric than process.  

It could go one of two ways:

1) BSA transfers the title and deed to the Settlement Trust/Settlement Trustee who then sells it on the open market.

2) Summit is sold by BSA and the funds transferred.

For example, I know there is one LC camp (cannot remember) that has said they will sell the camp this summer or simply transfer the title and deed.

[DavidLeeLambert]

1 hour ago, ThenNow said:

As a claimant, the thought of being diluted by fraud is painful. On one [hand], I don't want valid claims kicked for unsound reasons, caught up in a crusade to "purge the villains." On the other, I don't want invalid ones diluting and degrading the legitimate pool of victim/survivor claimants or impacting voting. [...] Sad for the BSA, too, but I feel a lot less sympathy there. 84,000 or 60,000?

One thing that Century hasn't explicitly said in pleadings so far, but that no one has ruled out yet either, is that the "questionable" claims they've highlighted and want to do some of their discovery on may be just the ones where the lawyers and/or claimants were sloppy enough to get caught. It could be that a lot more claimants are making the whole thing up (or at least are making up, or misrembering, the details that connect any abuse they received to Scouting) but did their basic research to write, or recount over the phone to an intake agent, a "plausible" claim.

One thing Century highlighted in a recent pleading was that almost 389 claims had exactly the same signature as other claims; they show 72 of them in an exhibit. I cross-checked the claim numbers against the TCC list, and only 39 of them, or about 10%, had a Local Council identified. It's not clear whether the 72 are one signature, and the other 300-odd are other groups of matching signatures, or if all 389 are actually that signature; but what if there are other groups of forged signatures, but forged to each plausibly be the alleged claimant's?  What if there are 40,000, or 60,000, or 70,000 such claims?

So if someone can get the list of claims under serious consideration down to 8,600, that $6,000-per-claimant offer from the BSA is up to $60,000, on average. And even that could still include some "less serious" abuse, so the most-serious cases could end up with even more.

Same-signature claimants analysis.pdf

[DavidLeeLambert]

4 hours ago, CynicalScouter said:

Yes, and here's the "but" I can see one limited instance in which this is relevant.

If the claim is for, say, $1 million based on the TCC or BSA abuse matrix, and it can be shown that the CO's negligence or the LC's negligence accounted for 75%, then the claim vs. BSA (or rather BSA's insurance?) is down to $250,000.

That of course would require a) lengthy determinations as to fault and liability and b) results in BSA National pointing fingers at LCs and COs.

Third-party liability might not just be against LCs and COs, however.

Consider the school principal. Maybe he was Cubmaster, or maybe he was COR and the victim is misremembering that he was Cubmaster, and the school or the PTA was CO, and he recognized the victim from pack meetings after school on school grounds. That would be a strong case of CO liability. But what if he was Cubmaster at a Masonic hall or church on the other side of town, and neither the school nor any related entity was a CO? And he became Cubmaster after being Principal already, so he had no Scouting involvement when the school hired him; in fact, the school board didn't know he was even volunteering with a pack?

Or consider the trip to Montreal. I know old editions of the Boy Scout Handbook gave a YMCA or YMHA as an example of a place where a troop might meet, but I doubt that the predecessor of today's YMCA Montreal chapter was ever a CO with the Boy Scouts of America - if anything, possibly with Scouts Canada. And did the Local Council approve a trip-plan for the trip after reading news articles about Montreal's hopping "pink light" district, thinking it would be good for the Scouts to be exposed to such diversity? Or after reading news articles about YMCA Canada's comprehensive and successful program, modeled after the BSA's, to discover and root out "homosexuals"? Or did they not find out about the trip until after it happened, and did they take quick action to revoke the registration of the SM and ASM after they found out?

[MYCVAStory]

Just a reminder...in an hour:

NOTICE OF VIRTUAL TOWN HALL MEETINGS HOSTED BY THE OFFICIAL COMMITTEE OF BOY SCOUT ABUSE SURVIVORS

The next TCC Town Hall will be held on Thursday, May 13, 2021, at 5pm PDT/8pm EDT. 

Zoom link: https://pszjlaw.zoom.us/j/87088314462

[CynicalScouter]

5 minutes ago, MYCVAStory said:

Just a reminder...in an hour:

NOTICE OF VIRTUAL TOWN HALL MEETINGS HOSTED BY THE OFFICIAL COMMITTEE OF BOY SCOUT ABUSE SURVIVORS

The next TCC Town Hall will be held on Thursday, May 13, 2021, at 5pm PDT/8pm EDT. 

Zoom link: https://pszjlaw.zoom.us/j/87088314462

And they post the video within 24 hours

[CynicalScouter]

1 hour ago, MYCVAStory said:

Just a reminder...in an hour:

NOTICE OF VIRTUAL TOWN HALL MEETINGS HOSTED BY THE OFFICIAL COMMITTEE OF BOY SCOUT ABUSE SURVIVORS

The next TCC Town Hall will be held on Thursday, May 13, 2021, at 5pm PDT/8pm EDT. 

Zoom link: https://pszjlaw.zoom.us/j/87088314462

Watching now.

All I can say is: wow. Wait until the video drops tomorrow. Wow.