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

[ThenNow]

2 minutes ago, MYCVAStory said:

Well, it just might be closer to 13.8% and explain why the TCC is saying "enough is enough" and coming out swinging.  OK, for the data-geeks, a VERY deep dive on this gives additional perspective from a friendly accountant looking over my shoulder.  His comment:

The percentages in the summary appear to be mathematically correct based on the amounts reported by the BSA; however, it is important to remember that amounts reported in Exhibit 1 for “Land Buildings & Equipment” are book value. As a result, in most (if not all) cases the percentages calculated in the summary you shared are artificially high / inflated because book value is generally lower than current market value / appraised value.

 

For instance, in the case of Greater New York Council (#640) (which admittedly is likely the most extreme example), the calculated percentage of “contribution to total net assets” is 43.05% ($9,000,000 / $20,904,468). However, the balance sheet information for GNYC in Exhibit 1 reports “Land Buildings & Equipment” at $5,630,537. This amount is obviously well below the appraised values for the three primary GNYC camps and results in an artificially high percentage of 43.05%.

 

640

GREATER NEW YORK

20,904,468

43.05%

 

As a result, the summary is informative but also somewhat misleading because it gives more credit to the Local Councils than they deserve. I understand that the conclusion of whoever prepared the summary was that Local Councils were only contributing 17% of their total net assets (which is offensive), but that percentage is still too high.

 

In order to make a quick and dirty adjustment for appraised values, we can use the Local Council liquidation analysis (Disclosure Statement PDF Page 306), which uses appraised values for those properties that were valued by CBRE, JLL and Keen. If you take total assets of $4,011,716,000 reported in the Local Council liquidation analysis and back off liabilities of $234,198,591 (PDF Page 333), you get total net assets of $3,777,517,409. Using total Local Council Contributions of $519,588,542 as reported on Exhibit C, you get a total percentage of 13.8% ($519,588,542 / $3,777,517,409).

 

While the overall difference between 17% and 13.8% is not massive, certain individual local councils (e.g. GNYC) come off looking much better than they should.

 

One additional thing to keep in mind. Exhibit 1 shows total net assets of $3,303,228,450 as of February 2021 (PDF Page 333). Based on a review of June 2021 balance sheet data, total Local Council net assets have increased by approximately $80 million to $3,382,300,795. In other words, Local Councils certainly appear to be in an even better position in June 2021 than they were in February 2021.

Anyone have any clue what the BRG appraisals would reveal? I assume/hope they nail the book v. market value, and other disparities, to the door of BSA “Church.” I know there are 250 theses not 95, and it’s not in Wittenberg, but I really like the visual. I’m sticking to it.

[CynicalScouter]

20 minutes ago, ThenNow said:

Anyone have any clue what the BRG appraisals would reveal? I assume/hope they nail the book v. market value, and other disparities, to the door of BSA “Church.” I know there are 250 theses not 95, and it’s not in Wittenberg, but I really like the visual. I’m sticking to it.

Guess. the "restricted" assets are not that restricted or minimally so.

Edited September 16, 2021 by CynicalScouter

[CynicalScouter]

30 minutes ago, MYCVAStory said:

As a result, in most (if not all) cases the percentages calculated in the summary you shared are artificially high / inflated because book value is generally lower than current market value / appraised value.

Yeah, and I admit I could have been clearer, but I did note my data was

Quote

as claimed by LCs and posted in the BSA Plan documents.

But I think this is the broader point.

32 minutes ago, MYCVAStory said:

closer to 13.8% and explain why the TCC is saying "enough is enough" and coming out swinging. 

Which is the broader point. The way some people were acting it was as if their entire council was going to be reduced to 3 Cub Scout belt loops and a pencil. MOST councils, even with my limited data set, were taking no more than 16.39% cuts to Total Net Assets. 17% is not terrific, and it will cause some councils to be forced to merge, but it is not catastrophic across the board.

[Bronco1821]

5 hours ago, Eagle1970 said:

Very well laid out. 

Though I am time-barred, I can assure the court that I have only recently, as a result of THIS process, realized the psychological damage my abuser has caused in my life.  I was always aware it had impacted me, but thought I could live with it.  Only now have I realized just how damaged I am, as a result of the actions of my abuser.  For all of these years, I have been going through the motions of living, being the tough guy and acting like I was ok.  Divorces-everybody has them.  Drinking-everybody does that.  But at age 65, this case has made me aware that I am not ok.  Maybe that tolls the SOL or maybe it doesn't.  Frankly, I don't care.  But I will say this:  I can find nothing more evil than should the BSA turn its back on traumatized victims after finally taking accountability and asking us to come forward as older men.  My proof, which was clearly indicated to be "confidential" has already been shared with my local council's insurance representatives (and who knows who else).  I just find it hard to fathom that this process would seek to destroy victims and then leave them hung out to dry.  Perhaps I should have known.

My feelings exactly.  Well said.

[Eagle1993]

3 minutes ago, Eagledad said:

I was not expecting this answer.

I assumed wrongly that the abuses (reports?) were categorized. I know of a hand full of sexual abuses that occurred in the council while I was leader, and none them were physically sexual in nature. There could have been some, but, the few I knew of not only were not physical, the complaint was at scouts. Not adults. Just seems the numbers shouldn't be used in these discussions. Could the number just 10 percent of the published discussed numbers the circumstances are whittled down to specifics? Who knows. We know scouts were physically abused, but seems we have no idea how many. 

Barry

There are details and details by council.  There are not details by year at least as far as I can tell.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/1a12ff15-6275-4111-af0d-7c683fdd59f2_6213.pdf

Page 368 for high level details., 389 by council

[CynicalScouter]

11 minutes ago, Eagle1993 said:

So, since BSA filed bankruptcy, it is very possible Local Councils' long term investments increased by $480M.  They are currently contributing $500M + $100M loan they are taking out.  Their entire contribution is almost covered by the increase in long term investments since they filed bankruptcy.

One thing that struck me about this is how that $500 million + $100 M came about and how the language changed from Plan 4.0 to now 5.0.

Plan 4.0: Local Council Settlement Contribution – General

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/1ec7e1fa-b4a3-43e4-aca0-6539d0b659e2_5484.pdf

"(1) at least $300 million of Cash to be paid on the Effective Date;
(2) Unrestricted properties with a combined Appraised Value (as defined below) of $200 million (the “Property Contribution”), which shall be reduced on a dollar for-dollar basis by any cash payment amount in excess of $300 million, provided that the methodology and procedures related to property selection and acceptance are provided for below; and
(3) the DST Note, in the principal amount of $100 million, issued by the DST on or as soon as practicable after the Effective Date.3 The principal terms of the DST Note are set forth in the DST Note Mechanics described below."

Did you catch that?

Plan 5.0: Where did the property go?

"(a) $500 million, comprised of at least $300 million in Cash with the balance in property, exclusive of insurance rights, (b) the DST Note, a $100 million interest-bearing variable-payment obligation note issued by a Delaware statutory trust on or as soon as practicable after the Effective Date, and (c) the Local Council Insurance Rights."

So, gone is even the vaguest hint of $200 M in property.

So, and I should have done it earlier, how much property is being offered for the deal?

Around $111 million. The rest is cash ($408 M)

 

[CynicalScouter]

Ad Hoc Committee of Local Councils filing in support of Plan 5.0 and opposing TCC motion to adjourn for at least two weeks

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/9c040598-7905-453b-b4c7-1aa8020f2f76_6245.pdf

Summary

1. Plan 5.0 is really just Plan 4.0 and the RSA with a few changes. Therefore, no need to delay the hearing.
2. The court already approved the RSA which forms the basis for Plan 5.0 so again, no need to delay.
3. "neither the BSA nor its creditors can afford more delay"
4. Plan 5.0 addresses most of the TCC's complaints about lack of disclosure in Plan 3.0 and 4.0. All local council contributions are now published.
5. All the other problems the TCC has should wait until plan confirmation, let's just get to a vote.
6. BSA is running out of money, which means BSA has less to contribute to a Settlement Trust, which has already dropped $30 million
7. The victims deserve to get their money faster
8. As it is, BSA's already having this drag out across the critical recruiting season (September/October) and its primary fundraising season (November/December). Longer this goes, less likely it is BSA survives.

[CynicalScouter]

FCR/Coalition support for Plan 5.0

600 pages, but only 1-28 are discussion, rest is depositions

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/8282a0ca-1622-4461-910b-2868d85658e9_6246.pdf

[CynicalScouter]

1 hour ago, CynicalScouter said:

FCR/Coalition support for Plan 5.0

600 pages, but only 1-28 are discussion, rest is depositions

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/8282a0ca-1622-4461-910b-2868d85658e9_6246.pdf

Section 1 is a lengthy discussion of why everything the insurers say is wrong, wrong, wrong in opposing the plan
Section 2 amounts to "attorneys for lots of victims agreed to this deal, so let's make this deal happen" ("The Amended Plan and the TDP are the Product of Extensive  Negotiations Between the Most Significant Stakeholders in the Chapter 11 Cases.")

A key element: the Trustee will be allowed to permit claims outside the statute of limitations but subject them to an as yet undisclosed "scaling" factor (see page 22) They cite to TDP Art. VIII.E.(iii) which cites to "Schedule 1" which I cannot find.

So, this brief is all about "insurers are wrong, wrong, wrong". Not a word about the TCC.

BUT BSA just filed their reply, so let's see.

BSA Reply brief against the TCC. 218 pages here folks. Stand by

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/94298a74-87db-4cbf-a0aa-5de1846320fa_6249.pdf

[CynicalScouter]

Nothing new that I can see: plan is wonderful, blah, blah save your objections for Confirmation, but this is new (or maybe I missed it)

The Best Interests Test Does Not Apply to Non-Profit Debtors and, Even If It Does, It Cannot Be Determined at the Disclosure Statement Stage

And BSA is making the case for why all claimants, even those in SoL states, should get a vote.

The Temporary Allowance of Abuse Claims at $1.00 Solely for Voting Purposes Is Proper

BSA is arguing, in effect, that giving $1 to EVERY claimant now is find since the settlement trustee can figure out the SoL issues later, and oh by the way, this is the best and only way to do this, otherwise we'll spend forever and a day deciding who gets to vote.

Quote

The Settlement Trust will evaluate each individual claim, and to pre-suppose that fact-intensive, litigation-derived process now, prior to solicitation, would be futile and lead to intolerable delay and harm to the Debtors’ estates....Setting aside the unworkability of engaging in this analysis for over 80,000 Direct Abuse Claims prior to solicitation, this argument places the cart before the horse. Utilizing only a portion of the claims review and valuation process contemplated in Trust Distribution Procedures —for example, the statute of limitations criteria or a severity analysis—for this purpose would lead to a proxy claim allowance process based on procedures that have not yet been approved.

So, it is futility argument: we are letting everyone vote NOW because the alternative (trying to parse out 82,500 claims values including statute of limitations issues) is "unworkable".

Edited September 16, 2021 by CynicalScouter

[RememberSchiff]

Let's stay on the legal topic, some excellent information and commentary here.  The rest can go in a new topic or

Thanks,

RS

@MattR @elitts @Eagle1993 @gpurlee  @T2Eagle

Edited September 17, 2021 by RememberSchiff

[acema606]

3 hours ago, CynicalScouter said:

Nothing new that I can see: plan is wonderful, blah, blah save your objections for Confirmation, but this is new (or maybe I missed it)

The Best Interests Test Does Not Apply to Non-Profit Debtors and, Even If It Does, It Cannot Be Determined at the Disclosure Statement Stage

And BSA is making the case for why all claimants, even those in SoL states, should get a vote.

The Temporary Allowance of Abuse Claims at $1.00 Solely for Voting Purposes Is Proper

BSA is arguing, in effect, that giving $1 to EVERY claimant now is find since the settlement trustee can figure out the SoL issues later, and oh by the way, this is the best and only way to do this, otherwise we'll spend forever and a day deciding who gets to vote.

So, it is futility argument: we are letting everyone vote NOW because the alternative (trying to parse out 82,500 claims values including statute of limitations issues) is "unworkable".

It seems to me from the outside looking in that it is largely "unworkable" and many of the problems BSA is up against is because they are trying to use the Bankruptcy Court in ways and for purposes it was never designed for.  Color me unsympathetic to BSA's impatience to the daunting tasks of due diligence and taking care of the victims.    

[CynicalScouter]

1 minute ago, acema606 said:

Color me unsympathetic to BSA's impatience to the daunting tasks of due diligence and taking care of the victims.

So, what would you propose on the subject of voting: review all 82,500 claims NOW and those with a valid claim not prohibited by a statute of limitations gets to vote?

[SiouxRanger]

2 minutes ago, CynicalScouter said:

So, what would you propose on the subject of voting: review all 82,500 claims NOW and those with a valid claim not prohibited by a statute of limitations gets to vote?

Yep.

 

Or, let everyone over the age of 3 in Uruguay vote also.  They have as much legal interest in the outcome of the vote as claimants with expired, legally unenforceable claims.

 

And, I also want to vote on your next pay raise, as long as I get 10% of the raise I vote for.

 

I agree with acema606.

[acema606]

24 minutes ago, CynicalScouter said:

So, what would you propose on the subject of voting: review all 82,500 claims NOW and those with a valid claim not prohibited by a statute of limitations gets to vote?

I certainly feel for the victims who are sadly outside of the statute of limitations and I wish there was an avenue for them to get some relief.  That being said, if the SOL has passed I don’t feel they should be permitted a vote or relief through this particular process.  That’s what statutes of limitations are about.  There is not an endless timeline for one to pursue righting most wrongs. I don’t say this because I am callous or to favor either side.  I say it because that is the standard currently as I understand it and it should be that way in principle until such time as something changes it.  I think there can be lively discussion on if that is good or not but we should operate under that.  I also don’t think doing what is right whether it be to BSA’s benefit or the victims has a timeline.  Some standard of validation is accepted and ordered by the court and it is used. Some of the things BSA is trying to do within this bankruptcy appear to be previously untested (lumping in the LC’s for example when they are legally separate in their eyes.). If one is in territory that is not completely known to them I think they have to leverage as much of what is established as precedent as much as possible and not throw out what is commonly accepted.  Just my personal rambling thoughts.