Bankruptcy, everything but the legalese

[Eagle1993]

One point that keeps coming up in the bankruptcy is BSA's financial situation.  BSA lawyers have recently stated they may need to start selling assets (oil leases, art work, etc.) to keep going.  These threats have been made from time to time.

I took a look at the financials posted since the beginning of bankruptcy and below is the total net unrestricted liquidity BSA lists. 

So, when will BSA run into trouble.

• $66M of these assets appear to be retirement benefits that are invested.  While unrestricted, I don't think BSA can really touch those to keep operating.
• I believe BSA is saying they need at least $30M to operate.  That probably allows them to deal with the cash flow changes during the year.
• So, lets assume BSA does not want to drop below $100M of net liquidity and if they do, they would need to look at selling assets to build up their liquidity.  

One pattern I have seen is that BSA liquidity is fairly stable between August and May and drops substantially between May and August.

See below in terms of asset changes ($M).  As you can see, $77M of loss between May and August of 2020 and 2021 and $15M of loss for the other 12 months since bankruptcy.  

Feb 2020 - May 2020	1
May 2020 - August 2020	-44
August 2020 - May 2021	-16
May 2021 - August 2021	-33

So ... based on this, when will BSA hit that $100M limit?

Well ... they were at $142M in August 2021.  Let's assume they lose that $16M again so May 2022 they will be at $126M.  After that ... BSA starts running into trouble.  Why?  Those next three months BSA will see major negative cash flow.  If 2022 is similar to 2021, they would end up in August 2022 at ~$94M ($66M of that is retirement).

My guess ... if BSA does not see a clear line of site of bankruptcy exit by ~June ... they will need to start selling some assets.  

 

 

 

[1980Scouter]

1 hour ago, Eagle1993 said:

One point that keeps coming up in the bankruptcy is BSA's financial situation.  BSA lawyers have recently stated they may need to start selling assets (oil leases, art work, etc.) to keep going.  These threats have been made from time to time.

I took a look at the financials posted since the beginning of bankruptcy and below is the total net unrestricted liquidity BSA lists. 

So, when will BSA run into trouble.

• $66M of these assets appear to be retirement benefits that are invested.  While unrestricted, I don't think BSA can really touch those to keep operating.
• I believe BSA is saying they need at least $30M to operate.  That probably allows them to deal with the cash flow changes during the year.
• So, lets assume BSA does not want to drop below $100M of net liquidity and if they do, they would need to look at selling assets to build up their liquidity.  

One pattern I have seen is that BSA liquidity is fairly stable between August and May and drops substantially between May and August.

See below in terms of asset changes ($M).  As you can see, $77M of loss between May and August of 2020 and 2021 and $15M of loss for the other 12 months since bankruptcy.  

 

Feb 2020 - May 2020	1
May 2020 - August 2020	-44
August 2020 - May 2021	-16
May 2021 - August 2021	-33

So ... based on this, when will BSA hit that $100M limit?

Well ... they were at $142M in August 2021.  Let's assume they lose that $16M again so May 2022 they will be at $126M.  After that ... BSA starts running into trouble.  Why?  Those next three months BSA will see major negative cash flow.  If 2022 is similar to 2021, they would end up in August 2022 at ~$94M ($66M of that is retirement).

My guess ... if BSA does not see a clear line of site of bankruptcy exit by ~June ... they will need to start selling some assets.  

 

 

 

I wonder if they would not ask LC's to contribute funds to keep BSA operating.  If National goes away, LC's are in a difficult situation. 

If they need another year to get through this, have LC's kick in just enough to keep them going. LC's (most) have the money.

[T2Eagle]

3 hours ago, ThenNow said:

I don’t disagree on the numbers and have said as much. However, I think the precise meaning and application of what Ynot and I are saying are missed in this reply. It is a bankruptcy-centric, we could’ve easily  “equitably compensated all survivors of abuse in Scouting” argument. (Note BSA, LCs, COs and insurers would not have been willing to put in the funds now being discussed for 1/10th the number of claims. It’s worth noting.) Your response says nothing of organizational transformation, which is what the two of us are talking about here. I could edit the announcement made on Feb. 18, 2020 and show you what I mean, but that may be too much. Perhaps Ynot will jump in and save me the trouble. Lower numbers would make the Chapter 11 easier. Maybe so, but please see my parenthetical. A simpler path would have had no impact on the internal go-forward functioning of the organization, efforts to ‘perfect’ the approach to protecting youth, or optimizing delivery of what the program has to offer. Many of these things I learned from you guys or was spurred to study after hearing your experiences. 

You seem to be toggling between two different things, PR and organizational reform.  Setting aside whether they can ever be effectively separated, I thought we were talking about PR. 

We may differ about what PR problem BSA had.  In the years leading up to the change in SOL laws that led to the bankruptcy, Youth Protection wasn't really the image problem BSA had.  The three "G"s: God, Gays, and Girls, were the issues scouting was getting hammered on in public opinion.  Our society had largely changed its views in these areas.  After all, no matter whether you were gay, a girl, or an atheist, you could be a marine and fight and die for your country, but somehow you weren't good enough to be a scout or scout leader.  To the extent that there were concerns about Youth Protection, for the most part BSA could point and say "terrible things happened in the past, but we've changed how we do things, and we do as well or better than anyone today."

From what little polling I saw, and from my own anecdotal experience, this was where the public was.  I rarely if ever got questions or had discussions about YPT, but membership rules did come up, both from potential parents and public discussions more generally.

So for BSA, the PR message at the start of the bankruptcy was "these terrible things happened in the past, but we're going to do the right thing, it's going to be painful but we'll do it, get past it, and move on into the future."  

 

[Eagle1993]

7 minutes ago, 1980Scouter said:

If they need another year to get through this, have LC's kick in just enough to keep them going. LC's (most) have the money.

National will:

1. Never declare Chapter 7
2. Never sell Philmont, Summit or major trademarks

Outside of that, I see everything else on the table.  So, yes, I could see National sending out a "request" to create a LC wide note to help fund National if needed. 

However, I think even this will be avoided.  Their artwork alone would probably get them until mid 2023.  

 

[qwazse]

16 minutes ago, Eagle1993 said:

...  Their artwork alone would probably get them until mid 2023.  ...

Making me wonder ... does BSA have any non-fungible tokens (e.g., insignia designs that were never deployed but could be marketed for others entities to use)?

[ThenNow]

36 minutes ago, T2Eagle said:

You seem to be toggling between two different things, PR and organizational reform.  Setting aside whether they can ever be effectively separated, I thought we were talking about PR.

Nope. No toggling. All of a piece. Ynot and I are talking about capitalizing on the occasion of filing for Chapter 11 as the perfect opportunity to be transformationally proactive during a dark hour. Woven into this non-toggling tapestry are various threads, including: 

1) organizational assessment and reform, including 360 reviews of the C-suit and paid professionals;

2) CSA claims resolution;

3) YP enhancements;

4) clarification of CO roles and responsibilities; 

5) independent harm and incident data auditing and disclosures;

6) ongoing harm data transparency, which includes CSA and YP violations; and

7) consultant’s assessment of BSA at all levels, including leadership development, deployment of programming, and size and makeup of national boards. 

Edited January 26, 2022 by ThenNow

[fred8033]

4 hours ago, ThenNow said:

I do see your point. It’s a fair one to make in this discussion. That’s not a statement of exoneration, just a recognition this is more complex than first meets the eye.

Yep.  Agreed, not an exoneration.

Paper registration may or may not make it into the office for months.  Often only at recharter.  Often got held up for multiple reasons.  Signatures.  Money.   

BSA depended on millions (literally millions) of volunteer helpers.  Unit paperwork helpers were usually registered, never their full-time job.  Our unit membership person probably had one week a year where it was six hours work.  Then probably an hour a month after that.  Usually, just another parent in the pack / troop.   

Only in the last two years did our school require volunteers to be registered and background checked before they started helping / interacting with students.  It is the same with scouts.  When I look at our local sports clubs, they have yet to make that transition.  

I'm not defending BSA or attacking it.  A paperwork system where you may or may not get the paperwork in a timely way with manual checks and names that shift is problematic.  I just think that was a sign of the times though.  

Not an exoneration at all though.

[MattR]

I was thinking about the kerfuffle between @skepticand @Muttsyand how it's just the same arguments. It seems nobody really sees a simple answer so some say chuck everything and others say it's really not that bad. So emotion takes over from solving problems. (BTW, there will be no banishing of forum members.)

I thought of one thing that really could both help reduce CSA and also improve average unit quality, which I admittedly harp on. The key to whether a unit is providing a good program is really a matter of trusting the leadership. Nothing brilliant there but trust is an age old problem, not to mention the first point of the scout law. Look at what it means to be true in the ancient view of that idea and it takes a very long time to be true or to trust someone.

Now, consider what it takes to become a SM. Fill out some paperwork, do a background check that is questionable, find some references that will be ignored. Now you can take kids camping. I used to hear about all of the problems the district commissioner had with other units and I didn't have any of those problems because I took the responsibility very seriously. My troop knew me for 3 years before becoming the SM. When we changed COs the only holdup was in developing trust, it took time before they were comfortable with me. For most other units, especially now, it's not years of getting to know someone and watching how they interact with children, it can be days. The issue is what is the minimum to develop that trust of the leadership?

In hindsight, what I went through should be a minimum, rather than exceptional. The character references should be a lot more than random people circling options one through five.

Every other scouting organization outside the US has groups of units, one for each age range. That might help create more opportunity to watch a potential leader interact with scouts and develop trust. The more people watching the fewer chances for failure.

[ThenNow]

19 minutes ago, fred8033 said:

A paperwork system where you may or may not get the paperwork in a timely way with manual checks and names that shift is problematic.  I just think that was a sign of the times though.  

Yup. I still get it. Issue being, the law calls it negligence - I think rightly for various reasons - so, it is negligence under the law and actionable. 

19 minutes ago, fred8033 said:

Not an exoneration at all though.

Acknowledged and appreciated. 

[SiouxRanger]

On 1/26/2022 at 8:59 AM, Eagle1993 said:

BSA lawyers have recently stated they may need to start selling assets (oil leases, art work, etc.) to keep going. 

Nobody  cares.  Sell.

 

On 1/26/2022 at 8:59 AM, Eagle1993 said:

These threats have been made from time to time.

They ARE threats.

I do not know anyone who responds with sympathy to threats.  Threats raise hackles.

BSA National, before filing bankruptcy, had the absolute BEST data on the number of abuse cases alleged against unit leaders, scout youth, local councils, chartering organizations, and so on.  And all the details thereof-National insisted that all council files on abuse cases were sent to National.  And BSA National, in light of, or in reliance on, that knowledge, filed a Chapter 11 reorganization in bankruptcy.  BSA National lit the fuse on the bankruptcy rocket.

On 1/26/2022 at 10:46 AM, 1980Scouter said:

I wonder if they would not ask LC's to contribute funds to keep BSA operating.

"They" being National?  Well, my understanding is that National does not "ask" Scout Executives.  National "directs." Probably subtly, but if a Scout Executive does not follow National's "company line" that Scout Executive does not get promoted-his/her career stagnates or crashes.

Consider, that 238 councils, more or less, all fell in line to contribute to the Settlement Trust the amount that National set as the local councils' contributions. And why was that so?

"Local Councils are independent corporations," says National.  Who believes that?  If local councils are truly "volunteer run" and independent, in order to obtain a 100% council compliance with National's Settlement Trust contribution "request," a majority of the board members on each and every council board would have to vote to approve the "contribution."

I do not know the specifics, but I know the process and can make reasonable assumptions and inferences from the limited information available.

So, what likely happened, is that the Scout Executive advised the Council President that National had set their council's contribution and the Executive Committee (a subset of the Executive Board-much smaller) approved the contribution amount.  The full Council Board, many there for resume building, just went along, or perhaps were only told after the event. Or never told.

National abhors nothing more that its lack of control.

Like the lead bird in a flock of starlings, when National turns, the whole flock turns in unison. 

[SiouxRanger]

On 1/26/2022 at 11:34 AM, MattR said:

(BTW, there will be no banishing of forum members.)

I checked-National Supply does not offer Scarlet Letters.  Not uniform approved.

[SiouxRanger]

On 1/26/2022 at 10:52 AM, T2Eagle said:

We may differ about what PR problem BSA had

I do not understand your comment.  BSA has no PR problem over child sexual abuse? Or something else?

BSA filed a bankruptcy over child sexual abuse cases. That is a PR problem to me of monumental significance.

 

On 1/26/2022 at 10:52 AM, T2Eagle said:

In the years leading up to the change in SOL laws that led to the bankruptcy, Youth Protection wasn't really the image problem BSA had.  The three "G"s: God, Gays, and Girls, were the issues scouting was getting hammered on in public opinion.

And that is likely true, but does not take into account that BSA actively accumulated and sequestered all documents pertaining to alleged child sexual abuse.

So, that the 3 G's were public issues, it is clear that BSA worked actively to conceal the biggest, existential threat to BSA; child sexual abuse.

Had BSA not concealed the child sexual abuse claims, it would have likely been THE TOPIC OF DISCUSSION and the 3 G's would have faded into the mists.

 

[SiouxRanger]

On 1/26/2022 at 8:59 AM, Eagle1993 said:

One point that keeps coming up in the bankruptcy is BSA's financial situation.  BSA lawyers have recently stated they may need to start selling assets (oil leases, art work, etc.) to keep going.  These threats have been made from time to time.

So, you challenge someone in an adult beverage facility to "Step out into the alley," and get the worst of it.

Mulligans are for golf courses, not alleys.

Bankruptcies are alleys.

[SiouxRanger]

On 1/26/2022 at 10:46 AM, 1980Scouter said:

I wonder if they would not ask LC's to contribute funds to keep BSA operating.  If National goes away, LC's are in a difficult situation. 

If they need another year to get through this, have LC's kick in just enough to keep them going. LC's (most) have the money.

Well, the local councils are in a horrible situation, just now with National STILL HERE, so if National goes away...?

And National DECREES to local councils, does not "ask."

 

Edited January 28, 2022 by SiouxRanger
ham-fisted typo on a Chicklet laptop keyboard.

[InquisitiveScouter]

54 minutes ago, SiouxRanger said:

Consider, that 238 councils, more or less, all fell in line to contribute to the Settlement Trust the amount that National set as the local councils' contributions. And why was that so?

"Local Councils are independent corporations," says National.  Who believes that?  If local councils are truly "volunteer run" and independent, in order to obtain a 100% council compliance with National's Settlement Trust contribution "request," a majority of the board members on each and every council board would have to vote to approve the "contribution."

This^^^^