Chapter 11 Announced - Part 4 Revised Plan

[CynicalScouter]

I just am catching up, but this is a doozy.

The TCC/FCR/Coalition filed a brief in support of the RSA. https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/cb5ac036-4493-4999-bba6-faf70eed01ee_5680.pdf

They absolutely want the court to force the insurance companies to pay and to make the bankruptcy binding on the insurance companies. And they want this issue settled NOW, not years from now, especially the argument that, if BSA and the LCs are only having to pay $850 million that insurance liability is capped at $850 million as well

Quote

The Supporting Parties will not support a plan that defers this issue until after confirmation. The Supporting Parties will not put survivors in a position where years after the Debtors’ receive a discharge and the Local Councils become protected parties, the insurers obtain an insolvency windfall. The survivors will not be re-victimized. If the insurers are seeking an insolvency windfall, that litigation must occur here and now.

They also go after LDS hammer and tong and argue that BSA shouldn't have to indemnify or protect LDS because LDS made or allowed that abuse to happen and then tried to cover it up.

Quote

LDS is a tortfeasor. Over 2,300 survivors filed proofs of claim against the Debtors alleging LDS-related  abuse in Scouting. Several of these claims are among the most horrific claims in these cases. LDS’ own proof of claim seeks reimbursement for abuse claims that LDS allegedly settled and legal fees that LDS allegedly incurred in defending against abuse claims. For each of these settlements, the claims result from LDS’ own acts or omissions and LDS has no right to seek reimbursement or contribution from the BSA.

 

[CynicalScouter]

Hearing is interesting.

BSA is withholding tons of materials regarding how the Executive Board decided to reach the RSA and its business judgement in doing so BUT at the same time is refusing to allow those documents out the door (other than there was a board meeting and who was there) and telling board members like Ownby and Mosby not to answer any questions  based on attorney/client privilege, mediation privilege, and a slew of other privileges.

In particular, it looks like the insurance companies are arguing that BSA has surrendered and is simply letting the TCC write the RSA in a way to screw the insurance companies. In other words, is this BSA's business judgment that the RSA is a good deal, or has it simply allowed one set of creditors (TCC) to take over the bankruptcy?

The insurance companies are objecting. The Catholic Dioceses/Methodists are objecting. Everyone's objecting. BSA cannot argue that the RSA is a reasonable business judgement and then refuse to say how it reached that decision and hide behind privilege.

Edited July 27, 2021 by CynicalScouter

[CynicalScouter]

Catholic Dioceses/Methodists attorney is pretty mad and certainly indicating the COs are upset. There was a comment that BSA will have a mediation session with COs "soon".

Judge is concerend

1) Mediation privilege/withholding: this issue should have been brought to judge sooner not at the last minute

2) On the other hand, on the surface looks like BSA improperly withheld information and mediation privilege did NOT include board minutes, presentations, etc. "Mediation doesn't cloak discovery" just because you put otherwise discoverable material and mediation material together. You redact the mediation material, not the ENTIRE document or the ENTIRE board meeting.

She is not prepared to delay the July 29 hearing. Instead, what she is indicating is that if suddenly some of these witnesses start to testify about things that are suddenly being released, she will reject the testimony.

Mosby's testimony MAY be struck entirely due to this mess. That is to be determined.

Think about this: BSA has managed to screw this up so badly that Mosby's testimony may get struck.

 

[CynicalScouter]

WOW.

At end of hearing, Lauria notes the RSA deadline terminates tomorrow.

Lauria notes that RSA parties are unwilling to extend the deadline but negotiation still ongoing.

Judge is furious.

The July 29 RSA hearing is now cancelled.

WOW.

The RSA plan is dead.

The deal is off.

BSA may re-schedule the hearing on the RSA or some modified version of the RSA for some later date.

Just wow.

All the depositions and such that was to take place about the RSA is off.

It's over.

I warned last month there were a ton of ways this could derail, and it did.

Wow.

I would expect media reports about this later this afternoon, but the plan to get BSA out of bankruptcy just blew up.

Edited July 27, 2021 by CynicalScouter

[ThenNow]

4 hours ago, CynicalScouter said:

Why on earth is the Coalition getting paid out for its legal fees now, ahead of everyone else including the victims? How does it rate such special treatment and, as the US Trustee pointed out, what statute authorizes this?

It is very, very much looking like the lawyers for the Coalition are getting a guaranteed payout now ahead of everyone else. The question is why and for what?

Yup. Here, here. I think I mentioned rotting fish up yonder and a bunch of material for a melodrama. Adopting the suggested analogy, I'm calling it, "The Chapter 11 Circus Came to Town." I'll shorten it. That's just the working title.

[CynicalScouter]

On 7/14/2021 at 4:44 PM, CynicalScouter said:

There is an 11th reason the RSA terminates: run out the clock. The RSA by its terms ends

1. July 28, 2021 (if RSA is not approved by the court by then) or
2. May 31, 2022 (if the RSA is approved)

All sides can agree to extend those deadlines. So, I guess the kill switch would be to somehow stall out proceedings until the RSA deadline hits and then the TCC and Coalition refuse to an extension.

That has now apparently happened. The kill switch has now happened. SOME parties to the RSA (TCC, FCR, Local Councils, Coalition, or some combo platter) have decided NOT to extend the deadline for the RSA (or at least were refusing to do so as of 3pm Eastern on July 27) therefore, the judge has decided to cancel the July 29 hearing on approval for the RSA.

The deal's dead folks.

Edited July 27, 2021 by CynicalScouter

[yknot]

12 minutes ago, CynicalScouter said:

WOW.

At end of hearing, Lauria notes the RSA deadline terminates tomorrow.

Lauria notes that RSA parties are unwilling to extend the deadline but negotiation still ongoing.

Judge is furious.

The July 29 RSA hearing is now cancelled.

WOW.

The RSA plan is dead.

The deal is off.

BSA may re-schedule the hearing on the RSA or some modified version of the RSA for some later date.

Just wow.

All the depositions and such that was to take place about the RSA is off.

It's over.

I warned last month there were a ton of ways this could derail, and it did.

Wow.

I would expect media reports about this later this afternoon, but the plan to get BSA out of bankruptcy just blew up.

Ka Boom. 

What does this mean for folks in the weeds? More 'keep your head down and keep going' for another couple months? Kids trying to get to Eagle? Victims hoping for some kind of resolution? 

[CynicalScouter]

6 minutes ago, yknot said:

Ka Boom. 

What does this mean for folks in the weeds? More 'keep your head down and keep going' for another couple months? Kids trying to get to Eagle? Victims hoping for some kind of resolution? 

It depends on how are apart the sides were.

First, who was it that was refusing to extend the deadline for the RSA? I don't think it was BSA and I extremely doubt (though not impossible) it was the Ad Hoc Committee of Local Councils. So that leaves FCR, Coalition, or TCC.

What follows is wild speculation. Copious salt here.

Fact 1) I noted that at least a dozen objections representing hundreds of abuse victims had been filed to the RSA plan.

Fact 2) Kosnoff was very vocal that this was a bad deal and a deal that wasn't legally supported.

Fact 3) The US Trustee and everyone else objected to this RSA.

Speculation: The TCC, FCR, Coalition, or some combination, sensing the blow back and sensing that there was little to no chance this was going to be approved decided to use the deadline to simply let the RSA die.

What happens next?

1) There is a disclosure statement hearing still set for August 17. We can go into that hearing without an RSA. And RSA isn't mandatory, it just makes things easier because it preresolves some issues with some parties.

2) We are back to where we were in June: no deal and nothing that would ever get to a deal that involves the LCs. BSA goes into that August hearing and tries to get itself out of bankruptcy and leaves both the COs and the LCs to fend for themselves.

 

[fred8033]

18 minutes ago, yknot said:

... and keep going' for another couple months? ...

Years.

[vol_scouter]

5 minutes ago, fred8033 said:

Years.

The BSA cannot survive more than a few months (few being poorly defined).  It would have to file Chapter 7 and the local councils would soon follow suit.

The legal system is badly broken.

[CynicalScouter]

6 minutes ago, fred8033 said:

Years.

BSA may not have years.

Remember: they kept saying over and over, out of money by July or August.

Even with the RSA, the fastest they could get out of bankruptcy was October.

This could be a simple one week delay to get a modified RSA put together.

This could be no delay at all and they can get to a disclosure statement on August 17.

Or this could mean yes years in which case at some point or another (sooner I suspect than later) the cost of the bankruptcy plus declines in membership simply kill BSA.

[CynicalScouter]

1 minute ago, vol_scouter said:

It would have to file Chapter 7

Not necessarily. It could exit bankruptcy as a "Failed bankruptcy" and simply wait to get sued out of existence.

Or, as Kosnoff's wanted, the judge could appoint a person to take over BSA and that person could determine that yes, there is no alternative left but Chapter 7 AND then go after the Local Councils for everything they've got.

[johnsch322]

36 minutes ago, CynicalScouter said:

Not necessarily. It could exit bankruptcy as a "Failed bankruptcy" and simply wait to get sued out of existence.

From where I sit that there would be a lot of lawyers making a mad dash to the court houses.  Most likely may not be the best for the insurers would it?  If hypothetically 10,000 lawsuits were filed that would be a lot of litigation with jury trials.

[SiouxRanger]

19 minutes ago, johnsch322 said:

From where I sit that there would be a lot of lawyers making a mad dash to the court houses.  Most likely may not be the best for the insurers would it?  If hypothetically 10,000 lawsuits were filed that would be a lot of litigation with jury trials.

I think that the bankruptcy stay prevents new lawsuits from being filed until the stay is lifted.

If claimants could file new suits now, high volume filings might persuade insurers to soften their bankruptcy stance instead of facing a demonstrated onslaught of new cases.

Since new cases cannot be filed, insurers can only speculate what they might face.

The idea of "onslaught" has to be tempered with recognition that filing a case which is outside a statute of limitations is not only pointless (a hollow threat) but probably legally unethical on the lawyer's part.

[SiouxRanger]

As near as I can tell, BSA has blocked disclosure of Hartford's policies and the amount of liability Hartford may face.  If I am incorrect, someone please educate me.  But, if that is true, it boggles the mind that the BSA and Hartford would seek approval of a settlement at $650 million without the benefit of knowing what is being given up.

The answer may be buried in all the pleadings.