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

[CynicalScouter]

And the race for the courthouse door is moving faster. Remember how I said there was like 850+ suits against LCs? Yeah, that was 2-3 months ago. There's going to be thousands by summer.

https://www.wsj.com/articles/boy-scouts-sex-abuse-victims-face-narrowing-windows-to-sue-local-councils-11619046471?mod=article_relatedinline

Quote

Men victimized during their childhood experiences in the Boy Scouts of America risk losing out on their chance to confront the local councils that allegedly failed to protect them, as time ticks down for sex-abuse survivors to file lawsuits in New York and elsewhere

In bankruptcy court, the Boy Scouts are struggling to come up with a settlement offer acceptable to tens of thousands of sex-abuse victims, part of a chapter 11 restructuring plan meant to protect from litigation not just the national organization but also hundreds...

 

 

Edited April 22, 2021 by CynicalScouter

[vol_scouter]

44 minutes ago, CynicalScouter said:

1) National issues annual charters to each LC.

2) If an LC fails to recharter, ALL assets of the LC revert to National. LC's do not have any choice in the matter.

3) The timing would be that

FIRST: National terminates all LC charters directly or by failing to issue an annual renewal.

SECOND: The LCs must turn over/transfer all assets to National, per the above.

THIRD: National itself dissolves under Chapter 7, leaving the combined pot of National + LC assets to creditors.

So the NC could liquidate while the charters are in force.  

As stated before, some states will contest the transfer of assets.

Councils could contest the transfer of funds since the NC had to liquidate.

Each council is an independent 501(c)3 corporation that could quit offering the BSA program but continue to serve youth.  While BSA items could be expected to be sent to the NC, other assets could be used on the new youth programs.  The LC Executive Boards can make these changes.  

Such strategies may or may not be ultimately be successful but would require time to work through.

[Eagle1993]

4 minutes ago, vol_scouter said:

So the NC could liquidate while the charters are in force.  

As stated before, some states will contest the transfer of assets.

Councils could contest the transfer of funds since the NC had to liquidate.

Each council is an independent 501(c)3 corporation that could quit offering the BSA program but continue to serve youth.  While BSA items could be expected to be sent to the NC, other assets could be used on the new youth programs.  The LC Executive Boards can make these changes.  

Such strategies may or may not be ultimately be successful but would require time to work through.

I completely agree and it seems like a far fetched plan.  In fact, I think National BSA could change the bylaws before entering Chapter 7; however, it has been submitted by several lawyers as their theory to the court.

That said, these along with arguments over restricted/non restricted assets are the types of things the court needs to rule on before any agreement is likely to be reached.  Unless the BSA just gives up and turns over everything, I highly doubt claimants will approve the plan (without exhausting their efforts in court).

[CynicalScouter]

12 minutes ago, Eagle1993 said:

In fact, I think National BSA could change the bylaws before entering Chapter 7;

That would absolutely look like hiding assets in order to avoid turning them over the creditors.

[MattR]

1 hour ago, CynicalScouter said:

1) National issues annual charters to each LC.

2) If an LC fails to recharter, ALL assets of the LC revert to National. LC's do not have any choice in the matter.

3) The timing would be that

FIRST: National terminates all LC charters directly or by failing to issue an annual renewal.

SECOND: The LCs must turn over/transfer all assets to National, per the above.

THIRD: National itself dissolves under Chapter 7, leaving the combined pot of National + LC assets to creditors.

That could be one interpretation. All of these rules assume national being able to decide whether they want to recharter a council. Is there anything that explicitly mentions what happens if national no longer exists? If not then it's a corner case that hasn't been considered. If so it could be that's what the judge gets to deal with.

In other words, we won't know until it happens. What will be will be.

[CynicalScouter]

Just now, MattR said:

Is there anything that explicitly mentions what happens if national no longer exists? If not then it's a corner case that hasn't been considered. If so it could be that's what the judge gets to deal with.

No, because no one ever even considered the possibility of BSA not existing. No one wrote into the BSA Charter or Bylaws "in the event we are dissolved, do X."

There are two other factors. First, not-for-profits cannot be FORCED into liquidation/Chapter 7. They can voluntarily enter it, but the creditors cannot force it/make a motion to convert the Chapter 11 to a Chapter 7. What they can do, however, is reject ANY plan that is not a Chapter 7.

Second, is the congressional charter: CAN a congressionally chartered organization which, per statute, has "perpetual existence" even be liquidated? The only other times such congressional chartered organizations shuttered was when membership reduced to 0 such as the Grand Army of the Republic when the last Union soldier died.

 

[skeptic]

First, it is simply sad that this discussion is even being made.  

So, if done with the right care, could LC's rewrite their own Charter to include a primary method of distribution of assets, one that does not have NC as the only option?  Yes, the vultures noted above would scream manipulation, but if it is a State sanctioned non profit, does not the state have the first word? 

 

Edited April 23, 2021 by Eagle1993
Removed comment about lawyers

[Rabid]

19 hours ago, skeptic said:

First, it is simply sad that this discussion is even being made. 

So, if done with the right care, could LC's rewrite their own Charter to include a primary method of distribution of assets, one that does not have NC as the only option?  Yes, the vultures noted above would scream manipulation, but if it is a State sanctioned non profit, does not the state have the first word? 

 

I’m a quiet newcomer here who was abused multiple times by my SM.

Until the lawyers physically rape me they are nowhere near as bad as the predator who actually did.

I’ll return to quietly watching the discussion again.

Edited April 23, 2021 by Eagle1993
Updated quote

[CynicalScouter]

And LCs are not "state sanctioned". They are registered and incorporated as not for profits by each state, but so what? That does not mean the State of Vermont's governor can order LCs not to turn over their assets to national should national refuse to recharter the LC.

Edited April 23, 2021 by Eagle1993
Updated as referenced quote removed.

[ThenNow]

16 minutes ago, Rabid said:

I’m a quiet newcomer here who was abused multiple times by my SM.

Until the lawyers physically rape me they are nowhere near as bad as the predator who actually did.

I’ll return to quietly watching the discussion again.

Welcome and thanks very much for adding your voice. I’m here with you.  Stay strong. 

[Eagle1993]

I think the one thing all of us need to remember is that what is said in public (even in court submissions) could simply be negotiation tactics. 

For example, National BSA may know that Sea Base, for example, will easily be lost if challenged.  They would never admit that in their submissions as it can be a traded off during negotiations if included in the final settlement.  Same with some of the submissions from lawyers.  Kosnoff and others likely know the council assets wouldn't really go to National if National goes Chapter 7 ... but they push that message to perhaps scare up more dollars from the Ad Hoc Committee. 

We are talking billions of dollars at stake.  BSA + Insurance offer so far stands at ~$1.1B.  It is very likely it will end up larger.  It would be one of the largest payouts in the last 5 years in any case in the USA and likely the largest sex abuse settlement ever.  I expect a lot of what we see is scripted to try and influence the final outcome.

Edited April 23, 2021 by Eagle1993
Removed quote as it was edited

[CynicalScouter]

41 minutes ago, skeptic said:

So, if done with the right care, could LC's rewrite their own Charter to include a primary method of distribution of assets, one that does not have NC as the only option? 

No. BSA's very, very clear. The LC must abide by National's requirement that the LC write into their Articles of Incorporation that If an LC fails to recharter, ALL assets of the LC revert to National.

Any LC that refuses to include that clause in their Articles of Incorporation will simply not be chartered by BSA.

This is clear as day in the Boy Scouts of America Charter and Bylaws

Quote

Upon termination of a local council charter or dissolution of a council, all rights of management and ownership of local council property shall become vested in the National Council for use in accordance with the Rules and Regulations of the Corporation. Local council articles of incorporation and bylaws shall include or be revised to incorporate this provision at the time of chartering or the next charter renewal.

 

[CynicalScouter]

26 minutes ago, Rabid said:

I’m a quiet newcomer here who was abused multiple times by my SM.

Until the lawyers physically rape me they are nowhere near as bad as the predator who actually did.

I am sorry for what you went through and what you just saw that poster post.

Rest assured: You are believed. You are welcome.

I for one don't support or condone sexual abusers, or attack the attorneys for those who seek justice in the courts.

[jr56]

Really sad that the people who actually committed these crimes go free, while innocent present and FUTURE scouts and scouters will pay.   When the BSA is eliminated, sexual predators will still be around, maybe other youth groups may be more or less successful at preventing their activities.   Nobody really wins,  the lawyers get rich, the victims get a cash settlement, which may or may not make things better for them, and the world will no longer have a scouting program.   

[CynicalScouter]

Just now, jr56 said:

and the world will no longer have a scouting program.   

Scouting will exist with or without BSA.