Bankruptcy, everything but the legalese

[elitts]

1 minute ago, Eagle1993 said:

My experience that I am seeing are assets that are listed as restricted by the BSA and LC and TCC but are going for possible sale anyway. TCC did consider restrictions.  That said, I’m sure LCs don’t agree with what the TCC is saying.   
 

I think the main point of the article is that LCs or COs shouldn’t be part of the National BSA bankruptcy.   If there are CSA claims, they should proceed in state court.  If they lose cases or believe they don’t have enough money, then they should enter their own bankruptcy.  

Having worked with non-profits for a while I know that generally speaking they frequently do a very poor job of actually tracking purchase agreements, endowment restrictions and even just segregating restricted and open funds.  Plus the level of specificity required on property transfers (to be upheld in the courts) has changed over the years.  So where today if you were going to do a restricted property transfer you'd file a Covenant Deed for the transfer and maybe even a separate Deed Restriction in order to enforce your wishes, 50+ years ago the intention to donate land solely for the purpose of a camp may only have been included on a purchase agreement, or might just be mentioned on a line or two within the deed.  Or it may have just been an oral agreement at the time the land was conveyed.  It doesn't make those restrictions less binding, just harder to prove.

And of course, as you've noted, restrictions are only as binding as the remaining donor families want to make them.  If no one tries to enforce a deed restriction, it's basically worthless.

Personally, I agree that they ideally they shouldn't have been included.  But it becomes murky given the insurance situation since BSA was carrying policies intended to cover everyone.  I don't know enough about insurance to know if that was an insurmountable problem or not though.

[elitts]

4 hours ago, johnsch322 said:

No matter what the LC's offer was much to low and the and the BRG analysis of the LC's show that. On top of that the only people who will decide on the low ball offer will be survivors.  It is a far stretch of imagination that even 75% of survivors would vote yes and more that that would more than likely have to.

I'm uncertain on the (suitability of the) amount of the offer.  I suspect it's too low.  My feeling on numbers like that in situations like this is that if one party quickly agrees, they're probably getting a deal.  But I also think the fact that the settlement is pulling in funds from LCs that face little to no risk is a significantly balancing factor.

Edited November 18, 2021 by elitts
added clarifying text

[johnsch322]

4 minutes ago, elitts said:

I'm uncertain on the amount of the offer.  I suspect it's too low.  My feeling on numbers like that in situations like this is that if one party quickly agrees, they're probably getting a deal.  But I also think the fact that the settlement is pulling in funds from LCs that face little to no risk is a significantly balancing factor.

The LC's offer is 600M.  If the plan passed that would get all LC's off the hook now and if other states open up their SOL's they won't be affected (essentially bankruptcy protection without paying the price).  The TCC's and many of the law firms say that is to little to get those protections and have sent the LC's BRG dashboards that show larger amounts that could be contributed.  

[SiouxRanger]

1 hour ago, elitts said:

However, without the qualifier "Available", that statement isn't very useful.  Regardless of what many folks would like to believe, many of those assets are restricted (certainly not all of them though).  And even where they aren't restricted, they often wouldn't end up on the table in anything but a liquidation. 

Quite frankly, even among those assets LCs have been selling, I suspect if you actually looked into the past you'd find out the properties were donated on the condition that they be used as scout camps but they've managed to skate by and get them sold without the families involved finding out to file court cases. 

I know it's happened around me at least once or twice.  I think it was Owasippe where they had the whole sale written up in the back room and basically signed when someone popped up and said "Uh.. You can't sell that."

As with all of the "legal paperwork" relating to National and the local councils, it is a mess.  Either intentional or by neglect.

Had folks donating property for the use of Scouting truly wanted to limit the use of their donation to that as a scout camp and no other.  And to prevent the sale of their donation, the legal path to do so is ridiculously simple, but apparently rarely used.

The deed of conveyance of the donated property to the local council should have contained all of the restrictions desired by the donors.  It also should have included was is called a "right of reverter," that is, which essentially provides that "if the property ceases to be used for the restricted purpose, title 'revert' to the donors (or their heirs)."

Then, that deed is recorded in the public record and thereby puts the whole world on notice (actual, or constructive = presumed notice).

Any prospective purchaser of the restricted property would have a title search conducted, find the deed of conveyance with restrictions and the right of reverter appear in the title commitment (a title company's written list of the documents adversely affecting title to the property), and require the local council to produce a document terminating the right of reverter before purchasing.

(As a practical note, the more time which has passed after the original donation, the greater the number of heirs, in the usual course of life, and the greater the number of folks from whom the local council will have to obtain consent.  Some may waive their rights, some may demand compensation, and other may outright refuse.)

No buyer in their right mind would buy a property subject to a right of reverter without that right having been fully terminated, because, if not terminated, the heirs could file suit and seek a declaratory judgment that the heirs are the owners due to the operation of the right of reverter.  The heirs would not have to pay any compensation to the buyer.  That is a bad result for buyer.

So, that there are "restricted" properties that are being sold without such adverse consequences to buyers (at least none mentioned so far in this forum), indicates that either:

1.  all the heirs agreed to terminate the right of reverter,

or,

2.  the "restrictions" were a non-public agreement between the original donor and the local council (the buyer had no notice of them at the time of purchase) leaving the legal battle between the heirs and the local council.  The buyer is in the clear,

or,

3.  the buyer had legal notice of the right of reverter, and is just taking a gamble that the heirs never show up to complain.  (This is a horrible idea, as the deed from the council to the buyer is a public record available to anyone who wants to see and copy it.  It will be public forever-and pretty clear evidence the local council violated its private agreement with the original donors.)

And, for all of that, a legal structure much more protective of the donor's interests is to create a trust, transfer title to the trust, provide that the local council can use the property for so long as used as a scout camp, and that the local council's rights END when it is no longer being used as such.  The heirs of the original donors would be the "remainder beneficiaries" of the trust and would be entitled to direct the trustee to do with the property as they see fit.  In this scenario, title to the property would NEVER be held by the local council, and thereby, the local council would have nothing to sell. A title search would show that the trust owns the property and any buyer would require a deed signed by the trustee who will not do so without express, written direction of all of the remainder beneficiaries.

[InquisitiveScouter]

40 minutes ago, SiouxRanger said:

And, for all of that, a legal structure much more protective of the donor's interests is to create a trust, transfer title to the trust, provide that the local council can use the property for so long as used as a scout camp, and that the local council's rights END when it is no longer being used as such.  The heirs of the original donors would be the "remainder beneficiaries" of the trust and would be entitled to direct the trustee to do with the property as they see fit.  In this scenario, title to the property would NEVER be held by the local council, and thereby, the local council would have nothing to sell. A title search would show that the trust owns the property and any buyer would require a deed signed by the trustee who will not do so without express, written direction of all of the remainder beneficiaries.

This is the model we will follow when we create our own non-profit for local youth to pursue scouting activities

[johnsch322]

11 minutes ago, InquisitiveScouter said:

This is the model we will follow when we create our own non-profit for local youth to pursue scouting activities

Does this mean you are in favor for a Chapter 7 liquidation of BSA?  That would give you one less youth organization to compete with for members correct?

[elitts]

2 hours ago, johnsch322 said:

The LC's offer is 600M.  If the plan passed that would get all LC's off the hook now and if other states open up their SOL's they won't be affected (essentially bankruptcy protection without paying the price).  The TCC's and many of the law firms say that is to little to get those protections and have sent the LC's BRG dashboards that show larger amounts that could be contributed.  

I meant I'm uncertain on the suitability of the offer.  I knew what the amount was.

[elitts]

2 hours ago, SiouxRanger said:

As with all of the "legal paperwork" relating to National and the local councils, it is a mess.  Either intentional or by neglect.

Had folks donating property for the use of Scouting truly wanted to limit the use of their donation to that as a scout camp and no other.  And to prevent the sale of their donation, the legal path to do so is ridiculously simple, but apparently rarely used.

The deed of conveyance of the donated property to the local council should have contained all of the restrictions desired by the donors.  It also should have included was is called a "right of reverter," that is, which essentially provides that "if the property ceases to be used for the restricted purpose, title 'revert' to the donors (or their heirs)."

Then, that deed is recorded in the public record and thereby puts the whole world on notice (actual, or constructive = presumed notice).

Any prospective purchaser of the restricted property would have a title search conducted, find the deed of conveyance with restrictions and the right of reverter appear in the title commitment (a title company's written list of the documents adversely affecting title to the property), and require the local council to produce a document terminating the right of reverter before purchasing.

(As a practical note, the more time which has passed after the original donation, the greater the number of heirs, in the usual course of life, and the greater the number of folks from whom the local council will have to obtain consent.  Some may waive their rights, some may demand compensation, and other may outright refuse.)

No buyer in their right mind would buy a property subject to a right of reverter without that right having been fully terminated, because, if not terminated, the heirs could file suit and seek a declaratory judgment that the heirs are the owners due to the operation of the right of reverter.  The heirs would not have to pay any compensation to the buyer.  That is a bad result for buyer.

 

I understand how it should happen.  But if you don't work in the field, you'd be absolutely amazed at how often people make incredibly stupid and uninformed decisions when it comes to buying property. (like a local developer that bought a 30 acre tract without realizing that the Seller's father had granted all development rights to the state for another 45 years)  That includes people buying multi-million dollar properties without surveys, inspections, lawyers, or even checking with the local municipality to see if there are outstanding issues.  The single biggest saving grace for most people is that if you want a mortgage on a property, you are going to have an underwriter insisting on title insurance who will insist on checking everything out. 

But if there's no mortgage involved, all bets are off on whether all the documents are fully completed or filed correctly.

[Eagle1993]

One of the concerns we have brought up early about the bankruptcy is that BSA seems only focused on CSA.  One can argue if the payments are sufficient or not, but BSA seems to have completely ignored the other financial perils it faces.  In particular, the massive debt it entered into bankruptcy with (when you include Summit) and the fact they are adding $100M to that debt, if not more.

Well, I think the first shoe is dropping on how we are going to pay that debt down.  Here are the Philmont trek rates:

2022

• 12 Day - $1,295
• 9 Day - $1,200
• 7 Day - $1,000

2023

• 12 Day - $1,490
• 9 Day - $1,375
• 7 Day - $1,150

2020 (as reference)

• 12 Day - $1,025
• 9 Day - $850
• 7 Day - $650

2020 - 2023 % Increase

• 12 Day - 45%
• 9 Day - 62%
• 7 Day - 77%

 

I'm not sure if we are seeing this elsewhere (Sea Base for example).  BSA needs to pay down the Philmont loans ... I expect these massive price increases are the plan.  (Note I also expect some of this is to pay higher salaries and deal with inflation pressure, but expect loan repayment is the big driver.

[skeptic]

You can always come back to what a similar experience from completely private vendors would cost.  Perhaps someone has some comparatives?  My search skills do not work well for me.  

[johnsch322]

2 hours ago, elitts said:

I meant I'm uncertain on the suitability of the offer. 

As a survivor I would say unsuitable and from the bankruptcy point of to be channeled the amount offered is supposed to be significant.  When you look at the total liabilities 600M is not significant.

[johnsch322]

4 hours ago, johnsch322 said:

4 hours ago, InquisitiveScouter said:

This is the model we will follow when we create our own non-profit for local youth to pursue scouting activities

Does this mean you are in favor for a Chapter 7 liquidation of BSA?  That would give you one less youth organization to compete with for members correct?

I get down voted for questioning someone who wants to create their own non profit scouting?

 

35 minutes ago, johnsch322 said:

As a survivor I would say unsuitable and from the bankruptcy point of to be channeled the amount offered is supposed to be significant.  When you look at the total liabilities 600M is not significant.

And for giving my opinion on the amount the LC's are contributing to the plan.  Which by the way is an opinion held by survivors and non survivors alike.

[InquisitiveScouter]

23 hours ago, johnsch322 said:

Does this mean you are in favor for a Chapter 7 liquidation of BSA?  That would give you one less youth organization to compete with for members correct?

Yes and no. 

Yes, I am in favor of a Ch 7 for BSA.  I believe we are to the point where we need a little "creative destruction."  I also believe a Scouting Phoenix will rise from the ashes...

No, the non-profit would exist to support only one local unit.  That unit could be a Scouts BSA unit if there is no Ch 7, or it could be could be a unit in some unnamed Phoenix organization.

BSA does not equal Scouting.  I mentally separate the two...one is a corporation, the other is an fun activity (when done rightly).

An analogy...if the US Tennis Association (a non-profit corporation) went Ch 7, people would still play tennis....same idea.

 

 

[InquisitiveScouter]

19 hours ago, johnsch322 said:

I get down voted for questioning someone who wants to create their own non profit scouting?

You can safely ignore down votes 😜

And I did not say we would create a non-profit scouting outfit...we would create a non-profit to support a unit for scouting...

You can see plenty of these "booster" clubs in existence already...

Like these...

https://friendsoftroop368.wildapricot.org/

https://www.causeiq.com/organizations/friends-of-troop-78,233028430/

https://www.for284.org/

And, if BSA goes Ch 7, we'll keep right on scouting...

Edited November 19, 2021 by InquisitiveScouter

[fred8033]

21 hours ago, Eagle1993 said:

I'm not sure if we are seeing this elsewhere (Sea Base for example).  BSA needs to pay down the Philmont loans ... I expect these massive price increases are the plan.  (Note I also expect some of this is to pay higher salaries and deal with inflation pressure, but expect loan repayment is the big driver.

Pay down debt?  Probably.  Also probably because BSA's finances are changed.  I doubt they receiving the huge subsidizing donations they had in the past.  I've watched price increases for 20 years that I've only been able to reason as correcting for lower donations.