Chapter 11 Announced - Part 7 - Plan 5.0 - Voting/Confirmation

[johnsch322]

57 minutes ago, ThenNow said:

I would like to have heard or now see the attorney’s argument given to the clients. My reason is not to question the viability of anyone voting to approve. That is their choice. I want to see if it is so convincing and unequivocal as to compel every single one of their clients. Not a single dissenter. Or, perhaps, was there very little communication and the attorneys merely said, “Trust us. We got your back”?

My thoughts exactly. How can not one of 100 vote differently. I also would like to know if this was a coalition lawyer. 

[ThenNow]

10 minutes ago, johnsch322 said:

I also would like to know if this was a coalition lawyer. 

No. DiCello, Levitt, Gutzler. No child sexual abuse experience stated on the site. Mass tort and PI. One case for the signatory of the master ballot was the “Propecia causes permanent sexual dysfunction” matter. Wait. Ah, er, um. Hold on a sec. I need to go throw out a bottle of something currently residing under my sink. Brb... 

[fred8033]

6 hours ago, ThenNow said:

Who knows. Throwing darts. My crystal ball is done up and busted on me. Okay. I threw agains the wall. Would you come over and fix the Sheetrock while you’re working on that remodel? I’ll pay you in one liners and pork hock stew. It’s delish. Modesty is not my strong suit. (Just to prepare, no one liners will be delivered during mudding or eating. Can’t abide poor skimming or stew spitting.)

I don’t know if you guys have read this. Just found it. I’d read it on the throne, but fear tossing my phone in the drink, as my gramps referred to anything containing water, including lakes. GibsonDunn. 

https://www.gibsondunn.com/congressional-committees-propose-changes-to-bankruptcy-code-prohibiting-non-consensual-releases-of-third-parties-and-limiting-other-important-bankruptcy-tools/

Conernnig NRPA, I'm not sure which side of the fence you are on.  I weight the article based on it's source.  A law firm.  NRPA allows for larger awards and maybe faster results (debate-able).  At the same time, it slams the rights of both victims and non-debtors to have their time in court.

I'm a rules guy.  It seems like a mismatch for a non-debtor to get protection from another's bankruptcy.  The non-debtor continues to exist; same company; with share-holders retaining value.

[fred8033]

6 hours ago, ThenNow said:

Kept the phone out of the drink. Also interesting. 

https://www.theday.com/article/20211225/OP01/211229706

@ThenNow ... By the way ... I know we've often been of differing opinions ... but I want to let you know ... 

I really appreciate your posting article / news links.  The sources are extremely useful and helps me learn.  Thank you.  

Edited December 29, 2021 by fred8033

[ThenNow]

7 hours ago, fred8033 said:

I weight the article based on it's source.  A law firm.  

I’m not looking for the conclusion or opinion in these pieces as much as information and analysis. Yes, the law firm has financial motive, but they also muck around in this world every day and need to know all sides of the argument. At any given moment, one member of the firm may be arguing one side and another the other. I sprinkle salt on everything. (I woulda coulda never gotten hired by IBM. Some of the old guys know what I mean.) I read. I listen. I try to really hear what everyone is saying to understand the rationale, politics, law, best interest of all and feasibility of application in the real, broken world. I don’t think it’s simple nor do I think it’s black and white.

7 hours ago, fred8033 said:

NRPA allows for larger awards and maybe faster results (debate-able).  At the same time, it slams the rights of both victims and non-debtors to have their time in court.

I’m not sure I understand what you’re saying. The NRPA proposes to ditch the non-debtor releases, preserve litigation rights and give them and “victims” their day in court. No?

Edited December 29, 2021 by ThenNow

[ThenNow]

“Chaotic.” I’ve not used that word to describe the Carnival, but it works. (Before I get in trouble with Mr. Schiff, this is an excerpt.)

https://www.reuters.com/legal/transactional/purdue-nra-boy-scouts-bankruptcies-that-defined-2021-2021-12-27/

“Despite making progress toward a deal to settle decades worth of sex abuse claims from former scouts, BSA’s bankruptcy proceedings were chaotic in 2021. Insurers questioned the validity of certain abuse claims. Attorneys for separate factions of survivors clashed. Allegations of problems with the system for survivors to vote on the deal persisted. An attorney's letter opposing BSA's proposed settlement was sent to thousands of survivors who weren’t supposed to receive it, causing more confusion among some who were already unsure about the deal. And throughout it all, many survivors have maintained that the proposed payouts are insultingly low. The organization is now waiting to see whether survivors will vote to accept the plan. Meanwhile, BSA's lawyers have warned that the longer this case lasts, the more money will be drained from the organization itself.”

[Eagle94-A1]

The biggest challenges IMHO are the promises national and local councils made to CO, and National made to  local councils: that they would be protected. The next biggest is BSA's model: the charter.

BSA made promises to both local councils and COs to protect them. That was one of the pitches to prospective COs for starting new units back in the day. COs felt they were protected from such lawsuits because they were told they would be, and now they are finding out otherwise. Ditto for the councils.

As for the charter concept, while while it has been likened to franchisee agreements, do the parent companies get to decide who the executives running the franchise are? Every professional must be "commissioned" by national. They must go through mandated training to get their commission, and  go through mandated training to get promoted. Also national selects the group of candidates for SE and other management positions. That is a lot of control of a local council IMHO.

 

[ThenNow]

9 minutes ago, Eagle94-A1 said:

BSA made promises

Those three words are the most succinct summary of what ails us that I have seen over the last 1 year, 10 months and 11 days. Bam! 

[Eagle1993]

42 minutes ago, Eagle94-A1 said:

BSA made promises to both local councils and COs to protect them. That was one of the pitches to prospective COs for starting new units back in the day. COs felt they were protected from such lawsuits because they were told they would be, and now they are finding out otherwise. Ditto for the councils.

 

I would agree; however, state courts can decide this for COs.  Note that Kosnoff has had a case dismissed against the BSA and local councils as, in the court's words, Chartered Organizations are responsible for units.  So, he was to sue the chartered orgs; however, in that case, the Chartered Orgs were defunct, so no one was left to sue.

So, BSA/Local councils ... in court ... stated that chartered orgs were ultimately responsible for units (and the court agreed in that case).  Now, if chartered orgs state they cannot be held liable ... who should be held liable?

[Eagle1993]

15 hours ago, ThenNow said:

Who knows. Throwing darts.

I don’t know if you guys have read this. Just found it

https://www.gibsondunn.com/congressional-committees-propose-changes-to-bankruptcy-code-prohibiting-non-consensual-releases-of-third-parties-and-limiting-other-important-bankruptcy-tools/

For non-debtor releases, when they are allowed in certain courts, this article mentions 5 rules that must be met.

(i) the identity of interests between the debtor and the third party, such that a suit against the non-debtor is akin to a suit against the debtor due to, for example, an indemnity obligation that may deplete the debtor’s assets;

• This could be argued in both chartered orgs and local councils.  If chartered orgs are sued over scouting activities post bankruptcy, I would expect they would point to the indemnity obligation BSA has in protecting them.  I think the court would review the local council and chartered org agreements to determine if this rule applies.

(ii) whether the non-debtor has contributed substantial assets to the reorganization; 

• Outside LDS, I see very limited to no contributions to the reorganization.  I understand some will point to insurance, but that is held by BSA.  Chartered orgs did not contribute their own insurance policies.  I question how the judge would see this as being met by COs.
• LCs ... I think one could argue they contributed a lot.  However, is it "substantial assets".  

(iii) whether the release is essential to reorganization; 

 

• This could be argued either way.  It would be beneficial to the reorg.  Is it essential?  I think for LCs, it is more essential.  Chartered orgs less.

iv) whether the impacted classes of claims have overwhelmingly accepted the plan in question

• TBD.  What is overwhelmingly?  In the past >90% has been expected.  Also, is it by non-debtor?  For example, what if votes of LDS claimants were <90%?  One would think LDS couldn't be released.  What if votes for one LC were less than 90%?  Again, not sure they could be released.  I think this is where vote by LC/CO will be critical, not just overall voting.  If we only see 66% approval overall, this likely means non-debtors are out.

(v) whether the bankruptcy court has made a record of specific factual findings to support such releases.

• I expect the above 4 will come up in court during confirmation and perhaps that is when factual findings could be made to support/deny releases.

 

So, just my guess, but my reading of the rules ... even when allowed .. put the Chartered Org releases at high risk.  Local councils are probably closer to earning their release.  Voting will be critical.  However, the judge could just go with Purdue and kick them out all together.

[Eagle94-A1]

Stupid question, but here it goes: what does the charter fee cover? I have been told it covers the CO.

[T2Eagle]

2 hours ago, Eagle1993 said:

I would agree; however, state courts can decide this for COs.  Note that Kosnoff has had a case dismissed against the BSA and local councils as, in the court's words, Chartered Organizations are responsible for units.  So, he was to sue the chartered orgs; however, in that case, the Chartered Orgs were defunct, so no one was left to sue.

So, BSA/Local councils ... in court ... stated that chartered orgs were ultimately responsible for units (and the court agreed in that case).  Now, if chartered orgs state they cannot be held liable ... who should be held liable?

It's not quite that COs say they can't be held liable, it's that they were indemnified/insured by BSA in the event that they were held liable.  That's why they're also claimants in the bankruptcy.  They have a claim against the asset that is the insurance contracts BSA has.

[fred8033]

7 hours ago, ThenNow said:

I’m not sure I understand what you’re saying. The NRPA proposes to ditch the non-debtor releases, preserve litigation rights and give them and “victims” their day in court. No?

Correct.   It was a simple summary saying law firms probably support third party releases as it supports larger awards and faster conclusions; versus on-going litigation in many courts.  My opinion is (like in BSA case) the result gets unwieldy; denies plaintiffs their day in court; lacks balance (bankrupt company becomes a new company; other debtor continues on); and in BSA's case, is just way too complex to be fair.  

The idea of bankruptcy protection seems right.  It's a chance to start fresh where there is value to continuing.  Liability protection for those not going thru bankruptcy feels like another form of unjust enrichment.  

[fred8033]

5 hours ago, Eagle1993 said:

So, just my guess, but my reading of the rules ... even when allowed .. put the Chartered Org releases at high risk.  Local councils are probably closer to earning their release.  Voting will be critical.  However, the judge could just go with Purdue and kick them out all together.

Could be argued (not by me) that COs are making substantial contribution because the insurance contribution is by the same insurance policy that covers the CO.  Effectively, that's the CO making a significant contribution thru their insurance coverage.  

[fred8033]

6 hours ago, Eagle94-A1 said:

As for the charter concept, while it has been likened to franchisee agreements, do the parent companies get to decide who the executives running the franchise are? Every professional must be "commissioned" by national. They must go through mandated training to get their commission, and  go through mandated training to get promoted. Also national selects the group of candidates for SE and other management positions. That is a lot of control of a local council IMHO.

Very common to franchises. 

"Commissioned" is effectively a qualification.  Here is a suggested franchise supervision clause.

• https://www.lawinsider.com/clause/supervision-of-franchise-business
• "You must not hire any General Manager or successor General Manager without first receiving our written approval of such General Manager’s qualifications. Each General Manager and successor General Manager must attend and complete our Initial Training (as defined herein). Each General Manager must sign a written agreement, in a form approved by us, to maintain confidential our Confidential Information described in Section 9.1, and to abide by the covenants not to compete described in Section 15.5. You must forward to us a copy of each such signed agreement. If we determine, in our sole discretion, during or following completion of the Initial Training program, that your General Manager (if any) is not qualified to act as General Manager of the Franchise, then we have the right to require you to choose (and obtain our approval of) a new individual for that position."

The most famous parallel example is McDonald's Hamburger University.  

• https://en.wikipedia.org/wiki/Hamburger_University

Franchises can also have on-site training / assessments and be required to get approval of who buys and is employed by the franchise. 

• https://www.franchise.com/blog/training-franchisors-provide/
• https://www.sba.gov/blog/8-rules-franchisees-must-follow