Chapter 11 Announced - Part 5 - RSA Ruling

[vol_scouter]

@CynicalScouter  If I read what you are saying correctly, the judge must approve the TCC, FCR, and Coalition to have attorneys present.  She could approve the insurance companies but deny the TCC, FCR, and Coalition.  Is that correct?

[CynicalScouter]

11 hours ago, vol_scouter said:

@CynicalScouter  If I read what you are saying correctly, the judge must approve the TCC, FCR, and Coalition to have attorneys present.  She could approve the insurance companies but deny the TCC, FCR, and Coalition.  Is that correct?

Correct:

1) The judge has given VERBAL approval for the insurance companies to be there because, well, it was their idea/their motion.

2) Anyone else who wants to show up (TCC, FCR, and Coalition) needs to get the judge's permission. And the insurance companies submitted to the court a proposed order that a) formally allows the insurers to take deposition (the judge gave permission ORALLY, it has to be in written form and signed) b) and allows the TCC, FCR, and Coalition to show up AND participate.

That means the TCC, FCR, and Coalition lawyers will get to ask their own questions of the aggregators at the very least.

Edited September 4, 2021 by CynicalScouter

[CynicalScouter]

So, just looking at the legal filings (which is why I am putting this here rather than the other thread) what at the insurers going to be wanting to ask the aggregators?

We know based on filings what it will look like.

The original document filed was 1974 (sealed version) and 1975 (unsealed)

https://cases.omniagentsolutions.com/documents?clientId=CsgAAncz%2b6Yclmvv9%2fq5CGybTGevZSjdVimQq9zQutqmTPHesk4PZDyfOOLxIiIwZjXomPlMZCo%3d%3e).&tagId=1153&noFrom=1975

First, the legalese.

When a victim/claimant signs a statement, the victim/claimant is saying this claim is based on THEIR knowledge.

However, many of these claims were not signed by the victim/claimant. They were signed by lawyers for the victim/claimant. And under the law, that means the LAWYER has now taken on some responsibility here.

There was an enormous amount of pressure put on the judge by the TCC, the insurers, and BSA to NOT allow mass signing/attorney signings. The Coalition, however, fought back. "Why should every other claimant get to have their attorney sign proofs of claim but not our clients?" they argued.

Quote

All Coalition is asking is that Sexual Abuse Survivors be accorded the same rights of virtually every trade creditor and bondholder that has ever filed a proof of claim in this District—the fact that a proof of claim is signed by authorized counsel will not be grounds for objection.

And then they said this

Quote

All claims, including those filed by Sexual Abuse Survivors, will be thoroughly vetted.

Nevertheless, the judge did permit the signature by the claimant’s legal representative, but she had warnings.

Quote

The Court recognized the risks created by permitting lawyers to sign proofs of claim.   While ultimately allowing this practice, the Court noted that it is “ill-advised.”23  The Court went on to caution that it would be “concern[ed]” if “a thousand claims [are] signed by a particular lawyer,” adding that an attorney signing a claim “might be[come] . . . a fact witness” and “may be subject to a deposition.”24   

The order is 1551

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/857120_1551.pdf

And so we get to document filed was 1974 (sealed version) and 1975 (unsealed).

1975 says in effect four things

1. Your Honor, we warned you this was going to happen and it did. Thousands of claims signed by the same lawyer, including several hundred signed by the same lawyer ON THE SAME DAY at a rate of 1 per 3 or 4 seconds in some cases. There is NO way the attorneys vetted anything.
2. The aggregators were "completing" forms for victims and then getting the lawyers to sign. So, it wasn't 100% the victims and it was getting mass/blast signed by lawyers who weren't vetting anything.
3. The aggregators then engaged in what can be described as fraud and/or forgery (at worse) or sloppiness suggesting no one was vetting anything (at best). Duplicate signatures. Xeroxed or cut and paste signatures. Etc.
4. Because the lawyers signed these, they are now fact witnesses to whether the claims were vetted and are accurate or not. An attorney who signs must AT LEAST make a "pre-filing inquiry" of the claimant.

So, the judge agreed to let the insurers have at the claims aggregators and left the question of whether these attorneys were actually doing any vetting for later.

 

 

Edited September 4, 2021 by CynicalScouter

[CynicalScouter]

3 minutes ago, CynicalScouter said:

So, just looking at the legal filings (which is why I am putting this here rather than the other thread) what at the insurers going to be wanting to ask the aggregators?

We know based on filings what it will look like.

The original document filed was 1974 (sealed version) and 1975 (unsealed)

Now, a LOT of lawyers filed objections to these efforts to get depositions of the lawyers and aggregators.

Most notably the Coalition in the form of multiple documents starting with 2043

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/872931_2043.pdf

1) We didn't commit fraud. We were running out of time. The judge only permitted attorney signed statements starting in late October. Attorneys had a choice: either let their clients claims lapse or sign as fast as possible. They opted to fast sign.

Quote

As  the  bar  date  deadline  approached,  law  firms  were  left  with  a  choice:    file  the
attorney-signed form based on the information gathered to date or file nothing and put the client
at  risk  of  being  denied  compensation  for  his  or  her  injuries.    This  timing  is  made  clear  by  the
Insurers’ own Motion.  Of the 15 attorneys the Insurers seek to depose for allegedly signing too
many proofs of claim in a day, those proofs of claim were executed in the final week leading up
to  the  bar  date.    See  Motion  at  5.    Certain  of  these  attorneys’  law  firms  filed  several  thousand
claims, only a small percentage of which were attorney signed

2) The attorney-signed forms are only a tiny fraction of the claims.

Quote

But  these  same  statistics  show  that  the  vast  majority  of  claims  filed  by  the  targeted  law  firms
were signed by abuse victims—over 49,000 per the Insurers’ own Motion—and strongly suggest
that attorney-signed forms were filed as a last resort.  Id.4  The fact that claim forms were signed
by attorneys does not prove or even indicate a lack of diligence or fraud.

3) The insurers lack standing to challenge these claims; only BSA may do so

4) Signing that claim does NOT waive attorney-client privilege and does NOT make an attorney a fact witness. All that the attorney has to do make a "reasonable" effort.

 

 

[CynicalScouter]

Well, that didn't take long.

The judge hasn't even officially signed the order for the aggregators to be deposed and AVA Law is objecting to the proposed order.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/2d21edbf-6d39-40f6-98d5-2aa553da2138_6166.pdf

In short: the insurers listed 4 entities they wanted to depose in their original motion:

1. Versus Claims Service LLC
2. Consumer Attorney Marketing Group
3. Archer Systems
4. Stratos Legal

In the reply brief the expanded it to a fifth: Reciprocity Industries, LLC, which is owned by  Andrew Van Arsdale (the "AVA" of "AVA Law").

AVA is now saying, in effect, the insurers named 4 entities IN THE MOTION, the judge say depositions were limited to  “permit the deposition of the aggregators that were listed in that particular motion" therefore they can't have Reciprocity deposed because it was not named IN THE MOTION.

 

Edited September 6, 2021 by CynicalScouter

[CynicalScouter]

Putting a price on Scouts sex abuse Deciding victim payouts fraught with complexities

 

"A USA TODAY analysis of court filings suggests that as many as half of those who filed claims could end up with a few thousand dollars - a fraction of what their counterparts have been allotted in more than a dozen bankruptcy cases involving Catholic dioceses.

 

One point of contention involves statutes of limitations - laws that prohibit survivors from suing for abuse after a set period of time.

 

USA TODAY found Scouts' identified 59,000 - 71% - as potentially too late under state statutes.

The Boy Scouts' insurance companies balk at paying anything in states where a civil claim would be barred, but the Scouting organization doesn't exclude these claims in its plan. Instead, it proposes a discount reflecting the breadth of the statute in the state where the victim lives or was abused.

 

For a rape claim filed in Alabama, where child abuse survivors can file lawsuits only until their 25th birthdays or within two years of the abuse, the base range would drop to $6,000 to $60,000, down from $600,000. For less severe claims, such as touching, the base could fall as low as $750.

 

An unusual provision in the Scouts' plan would allow claimants to wait for up to a year to see if the laws in their state change in their favor. Changing sentiments around statutes of limitations have prompted state legislatures to loosen restrictions; 35 states introduced such bills in 2021, according to a tracker from the nonprofit Child USA."

Edited September 7, 2021 by CynicalScouter

[CynicalScouter]

With two weeks to go until the September 21 hearing what could we expect?

1) From Local Councils: A listing of ALL local council payments as part of the settlement. As previously noted, some councils already released this info.

2) From BSA: who knows at this point. Could they bring forth a new RSA (with an increased Hartford settlement) and try their best to get it approved and then move on to the disclosure statement? Or just bypass the RSA stage and submit Plan 5.0 that integrates all the parts of the RSA/Plan 4.0 that were approved + with an increased Hartford settlement and statements-in-support from the TCC, FCR, and Coalition? If so, that greases the skids for the September 21 hearing, but doesn't mean 100% certainty because of all the other objections. Either way, I would expect some responsive filings to the challenges brought up to so far by others: that there's no way a bankruptcy court has the authority to judge 82,500 claims or do anything about them, that any such channeling injunction is void, that votes from victims in time-barred states should be set aside, etc.

3) From the U.S. Trustee: while not a veto-holder, I've been told (again my experience is state courts, not bankruptcy) that bankruptcy judges take U.S. Trustee statements seriously. Whatever the Office comes out with/already came out will will have to be addressed at that September 21 hearing.

3) From the COs: Who knows at this point. There's a ton of mediation and for all we know they are within minutes of signing a deal. Or they are deadlocked and prepared to fight BSA on September 21 kicking and screaming all the way.

4) From the insurers: We all know where this is going. Let's wait, wait, wait. Wait for (in no particular order) the aggregator depositions, depositions of the law firms involved with aggregators, vetting of all 82,500 claims, etc.

5) From Kosnoff: Burn it all down. Chapter 7 only. Liquidate everything. Repeat.

6) From sexual abuse victims not represented by Coalition or AIS: For those in states where they have no statutes of limitations (and therefore their claims are NOT time barred) most but not all have filed objecting to any vote plan that gives victims from time-barred states the same vote. Expect some more filings to this effect and some responsive filings.

7) From the judge: Probably not much. I will say one thing I've thought about since the hearing was how she ended it "noting" that "it is not too early" for parties to start making discovery and other requests for a confirmation hearing. You can never, ever predict what will happen, but that certainly to my ears sounded like "Let's start thinking about wrapping this up."

 

Edited September 7, 2021 by CynicalScouter

[Eagle1993]

 

I thought the RSA was approved.  What is the hold up?  It really comes down to:

• Charter Orgs - While BSA would love to get them included, I see almost no chance they allow this to delay final resolution.  BSA wants out and probably believes they can handle the damage from some COs leaving more than the damage from staying in bankruptcy.  I expect this is probably not the primary cause of the delay.
• Coalition fees rejected - If anything, I would think this would hasten a deal as the Coalition is not getting an upfront payment.  Now the only way for them to collect is to get a deal complete.  So, while it may cause some angst, I would be surprised if this is the reason for any delay.
• Hartford - I absolutely believe this is gumming up the works.  BSA will sign anything, so it is likely a negotiation between Hartford & TCC/Coalition.  I don't expect the current Hartford deal to stick long term (I believe they only have the right to have a vote on their current deal).  However, Hartford knows they can drag out this whole process a long time ... so this may be a time vs $ discussion.  
• Chubb/Century - I have to think the Judge's rejection of sharing details caused some strategy changes by the TCC/Coalition.  What if ... Century only pays out $250M and Harford a few hundred more.  Instead of billions you are talking a total settlement for 84,000 claims of less than $2B.  Less legal and admin fees that doesn't leave much.  So ... perhaps, a total deal may not make sense now.  Perhaps it makes more sense just to close out National BSA and leave LCs, COs and their insurance companies to battle in state courts.

I'm sure all of this is going through mediation/discussions which is leading to the delay.  If the judge struck the Hartford deal & agreed to discovery of Chubb/Century we would have probably already seen the RSA formalized for the late Sept hearing.  Her two rulings there just threw a major wrench in the process and now we wait.

In terms of councils, info has dried up.  I haven't heard of any more townhalls, email announcements, etc.  I'm curious if the Ad Hoc committee shut that down as technically, the deal is in limbo.  There was a surge of info after that RSA ruling, but nothing recent.  

 

Edited September 7, 2021 by Eagle1993

[Eagle1993]

2 hours ago, CynicalScouter said:

With two weeks to go until the September 21 hearing what could we expect?

1) From Local Councils: A listing of ALL local council payments as part of the settlement. As previously noted, some councils already released this info.

2) From BSA: who knows at this point. Could they bring forth a new RSA (with an increased Hartford settlement) and try their best to get it approved and then move on to the disclosure statement? Or just bypass the RSA stage and submit Plan 5.0 that integrates all the parts of the RSA/Plan 4.0 that were approved + with an increased Hartford settlement and statements-in-support from the TCC, FCR, and Coalition? If so, that greases the skids for the September 21 hearing, but doesn't mean 100% certainty because of all the other objections. Either way, I would expect some responsive filings to the challenges brought up to so far by others: that there's no way a bankruptcy court has the authority to judge 82,500 claims or do anything about them, that any such channeling injunction is void, that votes from victims in time-barred states should be set aside, etc.

3) From the U.S. Trustee: while not a veto-holder, I've been told (again my experience is state courts, not bankruptcy) that bankruptcy judges take U.S. Trustee statements seriously. Whatever the Office comes out with/already came out will will have to be addressed at that September 21 hearing.

3) From the COs: Who knows at this point. There's a ton of mediation and for all we know they are within minutes of signing a deal. Or they are deadlocked and prepared to fight BSA on September 21 kicking and screaming all the way.

4) From the insurers: We all know where this is going. Let's wait, wait, wait. Wait for (in no particular order) the aggregator depositions, depositions of the law firms involved with aggregators, vetting of all 82,500 claims, etc.

5) From Kosnoff: Burn it all down. Chapter 7 only. Liquidate everything. Repeat.

6) From sexual abuse victims not represented by Coalition or AIS: For those in states where they have no statutes of limitations (and therefore their claims are NOT time barred) most but not all have filed objecting to any vote plan that gives victims from time-barred states the same vote. Expect some more filings to this effect and some responsive filings.

7) From the judge: Probably not much. I will say one thing I've thought about since the hearing was how she ended it "noting" that "it is not too early" for parties to start making discovery and other requests for a confirmation hearing. You can never, ever predict what will happen, but that certainly to my ears sounded like "Let's start thinking about wrapping this up."

 

I have been looking at that Purdue Pharma bankruptcy and the US Trustee was pretty much ignored.  I doubt the US Trustee will be able to derail to outline of the deal (she had that chance earlier).

I expect  #4 insurance will be the big battle and discussion.  Does the TCC and Coalition go in blind and agree to a total package, hoping for gold at the end of the rainbow in terms of insurance payments.  Do they fight for a settlement up front now that the judge denied discovery.  Do they abandon the current path and decide to go after them in state courts.  Who knows ... but I expect this is the big discussion right now.

CO's, if they want, could buy their way into the deal.  I expect the lawyers for the Coalition may be happy to leave them out as they can then sue them in state court.  Right now, my guess is almost no CO is included in the final deal and there will be hundreds of lawsuits against them over the next few years. 

I agree with your comment about the judge ... she wants this case done.  She seems to be fair (she doesn't want to have it overturned on appeal) but the time for testing theories has passed.  

 

[CynicalScouter]

5 minutes ago, Eagle1993 said:

I thought the RSA was approved.  What is the hold up?

The judge approved the RSA WITH TWO MAJOR AMENDMENTS:

1. The Hartford settlement is still in.
2. The Coalition is not getting paid ahead of everyone else.

For those two reason, BSA has never formally asked the judge to sign an order making the RSA (or what is left of it) go into effect. Lauria noted in the last hearing: the moment BSA does offer such a proposed order, Hartford can claim BSA is in breach of their agreement and file a claim for damages against BSA that takes precedence above everyone else.

So, the RSA isn't going anywhere.

[elitts]

14 hours ago, Eagle1993 said:

CO's, if they want, could buy their way into the deal.  I expect the lawyers for the Coalition may be happy to leave them out as they can then sue them in state court.  Right now, my guess is almost no CO is included in the final deal and there will be hundreds of lawsuits against them over the next few years. 

 

I think the logistics of that make it pretty much impossible at this point.  If the COs were nationwide or even councilwide organizations it might be different, but you are talking about thousands (tens of thousands?) of COs.  I can't fathom how you could organize the lot of them into some kind of a coherent coalition in less than another 12 months.

12 hours ago, Muttsy said:

Technically you could be right. But what then for BSA? She has to find the BSA only discharge leaves it with what financially to start over? No cash, the bases and a donor base spigot it could turn on. It could close LC’s or merge them and grab their assets. Then it could quickly file another Ch 11 to discharge any other liabilities it carries out of Ch 11 1.0. 
 

Not sure how it operates without chartering orgs. I’m sure they have a plan for that.

Or maybe the mountain of blunders, bad legal advice and rank incompetence make the situation not resolvable.

I’m just not seeing the path, just the Road to Perdition  

 

As I've said before, there isn't any functional mechanism for the BSA to simply seize council assets.  Even for those councils that wrote the "everything goes to BSA upon shut-down" into the bylaws, the answer is a simple vote to change bylaws by the LC.  Attempting to seize the assets by force (legally speaking) would result in multiple lawsuits all across the country and the BSA can not afford either the legal fees or the bad PR that would entail.

And I highly doubt we'll see COs pull out of the BSA completely.  Most COs that have troops are generally happy to have them (even if you do get the occasional staff member peeved about messes).  If we do actually end up with COs getting sued into bankruptcy all over the country, I could see many of them being unwilling to charter, but they'll still host the troops/packs as lessors. 

Though I'm sure we'll hear more stories about COs that decide to throw a tantrum and refuse to re-charter while also confiscating all of a troop's equipment and re-purposing it.

[CynicalScouter]

10 hours ago, vol_scouter said:

So if the LCs are not part of the settlement and will face lawsuits and be quickly forced into Chapter 11 or 7, will that not negatively affect the BSA business plan?  If major COs totally drop Scouting, units could have difficulties finding meeting places causing many to fold.  That would adversely affect the BSA emerging from Chapter 11.

The fact that BSA cannot survive without the LCs and COs does not mean they get their hands washed/claims waived.

This is that needle they are trying to thread: to get the BSA bankruptcy (within which context the LCs and COs are third parties) to cover the LCs and COs and discharge their liabilities/claims.

As was pointed out before, it's a really, really hard legal case to make.

[CynicalScouter]

12 hours ago, Muttsy said:

It could close LC’s or merge them and grab their assets.

This has come up in the past and I know it is part of Kosnoff's big plan/idea.

In short, it is NOT clear that can happen, for a host of reasons.

The BSA Charter and Bylaws theoretically require that all LCs include in their local articles of incorporation a statement that, on dissolution of the council, assets revert to national. HOWEVER, I've been made aware of at least two dozen councils that have simply refused to put that language in. Moreover, a host of state not-for-profit laws make it clear that such a move would and could be contested in state court as an unlawful transfer of charity or not-for-profit assets. Finally, even absent these two, I am sure that if BSA National make such an attempt they might get away with it with smaller councils but larger ones with bigger war chests would fight it tooth and claw.

 

[Eagle1993]

11 hours ago, vol_scouter said:

Seems to me that the BSA needs to thread the needle and satisfy the claimants representatives, LCs, and COs.  Not certain that it is possible but not certain that the BSA cannot make a viable business plan without one of the pieces.

The only major hurdle stopping progress right now is Hartford, and the paths to clear that hurdle are limited.  There were rumors of a new settlement with Hartford but so far, nothing concrete.

Once the Hartford deal is cleared, I don't see the BSA or TCC/Coalition delaying the closure of bankruptcy on CO negotiations.  At that point, each CO will either be on this train or at the station.  I expect that many COs see the writing on the wall that they are being left behind.  BSA will need a plan to efficiently charter units without COs as we enter in rechartering in the next month.  

I do expect BSA will fight hard to keep LCs as part of the deal ... harder than they would fight for COs.  That said - if the Hartford deal (or perhaps the Coalition payments or lack of Century/Chubb discovery) destroys the current RSA, I expect BSA would be willing to leave bankruptcy with a National only deal.  Definitely less than ideal.

@MYCVAStory has mentioned this many times.  There is no guarantee that all legal avenues will be covered by this bankruptcy and claimants should ensure they have legal representation in state court.  That could be for COs and/or LCs depending on the outcome.  TCC has mentioned this multiple times as well.  Nothing is in stone yet, hopefully we see more progress soon.

[CynicalScouter]

2 minutes ago, Eagle1993 said:

That said - if the Hartford deal (or perhaps the Coalition payments or lack of Century/Chubb discovery) destroys the current RSA, I expect BSA would be willing to leave bankruptcy with a National only deal.  Definitely less than ideal.

Right, and one way or the other (BSA only, BSA/LC, BSA/LC/CO) it seems pretty clear at this point victims will be given a vote that looks like

1. Hartford at $850 million (maybe)
2. BSA/LC at $850 million
3. Insurance, which may equal billions or may be worth not much if anything

That third point is such a big giant question mark that it may be victims simply refuse to approve without more data.