Chapter 11 Announced - Part 6 - Plan 5.0/TCC Plan TBD

[johnsch322]

I have been browsing thru the TCC's Local Council analysis and I am amazed at the differences of % of contribution from unrestricted assets from council to council.  Some give very little compared to what they have and some give a lot more and that can be within the same state.

[1980Scouter]

6 hours ago, johnsch322 said:

I have been browsing thru the TCC's Local Council analysis and I am amazed at the differences of % of contribution from unrestricted assets from council to council.  Some give very little compared to what they have and some give a lot more and that can be within the same state.

I think this is where number of claims comes into play. The formula included this. I have noticed the same in my state.

Although not necessarily fair, maybe the councils with fewer claims and large reserves could agree to contribute the same percentage  amount to get the LC contribution up to a level that would pass the vote.

They may have to do this to save Scouting for the future. As Eagle 1993 said just one LC lawsuit would cost more than many LC's are contributing if the circumstances were right.

[Eagle94-A1]

1 hour ago, 1980Scouter said:

Although not necessarily fair, maybe the councils with fewer claims and large reserves could agree to contribute the same percentage  amount to get the LC contribution up to a level that would pass the vote.

I hope this happens, but I have a gut feeling it won't. Councils are worried about their own survival, and many are focused on their own problems, and either cannot, or do not, want to see the big picture.

But I could be wrong. Anyone hear of merger talks taking place next month?

[johnsch322]

3 hours ago, 1980Scouter said:

think this is where number of claims comes into play. The formula included this. I have noticed the same in my state.

The number of claims can vary greatly.  There are LC's with 2 claims giving a higher % than LC's with 300 claims.  No rhyme no reason.

[elitts]

3 hours ago, johnsch322 said:

The number of claims can vary greatly.  There are LC's with 2 claims giving a higher % than LC's with 300 claims.  No rhyme no reason.

I'm absolutely certain there is both rhyme and reason, we just don't have the data to understand it.  2 claims in an open SoL state for horrendous abuses is a much more significant financial risk than 300 claims that are all time barred.  It wouldn't surprise me if the assets at risk factor in too.  A LC with no major assets at risk beyond cash accounts has very little reason to be concerned about lawsuits.

[vol_scouter]

49 minutes ago, elitts said:

I'm absolutely certain there is both rhyme and reason, we just don't have the data to understand it.  2 claims in an open SoL state for horrendous abuses is a much more significant financial risk than 300 claims that are all time barred.  It wouldn't surprise me if the assets at risk factor in too.  A LC with no major assets at risk beyond cash accounts has very little reason to be concerned about lawsuits.

You are absolutely correct.   The local council’s exposure is a function of the number of claims, severity of alleged crimes, statute of limitations status, and likelihood of a severe judgement.   There could be other factors as well.  The council’s financial situation, unrestricted assets, size of council and other factors.  The analysis is much more thorough than the TCC.  Additionally, the TCC does not really understand the way councils work and their challenges but fellow councils do.  
 

If the current RSA is not approved, I predict that the average claimant ends up no better than they would have by accepting the RSA though the attorneys will make a lot more money.  
 

This is all very sad.  

[johnsch322]

1 hour ago, elitts said:

I'm absolutely certain there is both rhyme and reason, we just don't have the data to understand it.  2 claims in an open SoL state for horrendous abuses is a much more significant financial risk than 300 claims that are all time barred.  It wouldn't surprise me if the assets at risk factor in too.  A LC with no major assets at risk beyond cash accounts has very little reason to be concerned about lawsuits.

So when I am looking at Los Padres (California) with 83 claims with a low range of liability at $31,875,500 and high range at $144,323,500 and $14,453,991 in unrestricted assets contributing $1,834,155 or 12.7% of net unrestricted assets 

VS

Ventura Council (California) with 84 claims with a low range of liability at $30,178,500 and high range at $136,510,500 and $1,437,344 in unrestricted assets contributing $325,108 or 22.6% of net unrestricted assets 

I do not understand the data?  

[Eagle1993]

44 minutes ago, johnsch322 said:

So when I am looking at Los Padres (California) with 83 claims with a low range of liability at $31,875,500 and high range at $144,323,500 and $14,453,991 in unrestricted assets contributing $1,834,155 or 12.7% of net unrestricted assets 

VS

Ventura Council (California) with 84 claims with a low range of liability at $30,178,500 and high range at $136,510,500 and $1,437,344 in unrestricted assets contributing $325,108 or 22.6% of net unrestricted assets 

I do not understand the data?  

There is some sort of formula we will probably never see.  I expect it includes net unrestricted assets, claims, perhaps SOL vs outside SOL, etc.  They had some sort of formula.  The TCC, right now, does not show in these filings what they think the council can pay.    We do know, that on mass, they believe in order for their liability to be discharged through bankruptcy it should be closer to triple their prior offer.

In the end, I doubt the judge is going to discharge liability against thousands of organizations with this much churn in claimants.  Perhaps if DOJ, TCC and everyone was on board, she would give it a green light.  I just don't see it ... the Purdue pharma is getting enough bad press and that was much less far reaching.

I can already hear her saying .... While there is a path to allow the discharge of non debtors, the bar to clear is incredibly high.  While I understand the debtor's position, and the potential impact to their business plan, I just cannot accept a plan that discharges liability without the complete and total support of all parties.  We are not there.  I would ask the debtors to go back and determine if this is the path they would like to continue ... or if they need to change their strategy.  ... 

Unless there is a major change ... I think this ends with a BSA only plan.  Perhaps the TCC can save it by offering an LC by LC buyout, but the price may be too high for most councils.  

Time will tell ... but the faces of all involved appear grim.

[elitts]

1 hour ago, johnsch322 said:

So when I am looking at Los Padres (California) with 83 claims with a low range of liability at $31,875,500 and high range at $144,323,500 and $14,453,991 in unrestricted assets contributing $1,834,155 or 12.7% of net unrestricted assets 

VS

Ventura Council (California) with 84 claims with a low range of liability at $30,178,500 and high range at $136,510,500 and $1,437,344 in unrestricted assets contributing $325,108 or 22.6% of net unrestricted assets 

I do not understand the data?  

At a guess, one thing that might be a factor is the LCs source of funds.  If the Ventura Council operates using a general fund derived entirely from annually renewable sources (donations, FoS, fees), that 1.4 million might simply represent a "rainy day fund".  Whereas in units with lots of scholarship youth and minimal fundraising, annual operating funds may be coming from investment interest.  So that 14.5 million dollars might represent an irreplaceable source of income instead of being a usable cash balance.

[MYCVAStory]

1 hour ago, Eagle1993 said:

There is some sort of formula we will probably never see.

Could be.  I think I remember the TCC saying that their calculations also included the LCs being able to maintain their credit rating.  Perhaps they'll discuss more of this tonight at the TCC.

 

[Eagle1993]

Purdue Pharma bankruptcy has been overturned on appeal.

https://www.wsj.com/articles/judge-overturns-4-5-billion-settlement-between-purdue-pharma-sacklers-11639698359

Issue was allowing releases of shareholders under a company bankruptcy.  Bankruptcy code does not authorize such non-consensual non-debtor releases.  

Voting ... 95% of the 120,000 plus votes were in favor of the plan ... and it still lost on appeal.

[Eagle1993]

12 minutes ago, Eagle1993 said:

Purdue Pharma bankruptcy has been overturned on appeal.

https://www.wsj.com/articles/judge-overturns-4-5-billion-settlement-between-purdue-pharma-sacklers-11639698359

Issue was allowing releases of shareholders under a company bankruptcy.  Bankruptcy code does not authorize such non-consensual non-debtor releases.  

Voting ... 95% of the 120,000 plus votes were in favor of the plan ... and it still lost on appeal.

Note that the issues are different in the BSA case in that there are questionable conduct by the Owners prior to filing.  That said, I still find the various bankruptcy cases interesting as they are a bit ahead of BSA’s and may give us an indication of the hurdles left ahead.  

[Eagle1993]

TCC talking about Purdue.  BSA case is in the 3rd Circuit while Purdue is in 2nd.   However, the judge addresses topics that apply to the BSA bankruptcy.   There may or may not have some impacts.  TBD…

[Eagle1993]

TCC agrees with the estimate I had …. BSA will likely only start paying the $100M around 2035 (note payments stop 2036).

[Eagle1993]

Prof. Jacoby @melissabjacoby on Twitter has a good analysis of the Purdue ruling yesterday.  In addition, there are a large number of articles out (Reuters goes in a bit deeper as does WSJ).  Based on those and comments from the TCC town hall..

• The Purdue ruling will be appealed AND it is in a different circuit .... so it sounds like no immediate direct impact to the BSA case; however, the case still could be influenced as bankruptcy courts watch each other and this appears to be a major deep ruling (142 pages) that reference prior supreme court rulings that greatly limits bankruptcy court to follow the law
  • Note that supreme court ruling comes from Jevic (2017) 
• Bankruptcy law does not include non-debtor releases.  This was added due to a ruling in one case and now it caught on like wildfire.  The appeals court states ... right now, just because bankruptcy law does not include language you can't have non-debtor releases doesn't mean you can.
• Bankruptcy law is meant for bankruptcies.  However, it has expanded now to the point it is replacing state court litigation.  This was never the intent.  Just recently, think of BSA, USOC, Johnson & Johnson, Purdue Pharma, etc.   

From the various articles, it looks like this is headed (eventually) to the Supreme Court.  The question is ... can bankruptcy court replace state courts for non-debtors.  There is nothing in bankruptcy law that allows this. 

So, the question for the BSA case.  I wonder if there is any chance a plan is approved with DOJ/TCC rejecting the plan.  That seems like it would be ripe for appeal.  

BSA should be ready with a plan of a BSA only exit.  

Edited December 17, 2021 by Eagle1993
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