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

[ThenNow]

9 hours ago, fred8033 said:

PS - I miss an older co-worker who for years and years ran a word-of-the-day poster.  

That warms my heart. I did that in college and literally just told someone about it earlier this week. Ok. I will exit quickly, lest I get the penalty box for “content unrelated to the topic.”

[ThenNow]

2 hours ago, Eagle1993 said:

I've seen several question how you can pay claimants from one council with money from a different council.  So, perhaps, we may see a council by council payout and if a council pays out that money goes to claimants from that council.  Then votes of those claimants would have to pass.  If a council doesn't pay out, they will have their own liability going forward.

 

1 hour ago, 1980Scouter said:

This is a very good fair way to do things on the LC level. Each council decides and pays for their liability. Better chance of passing local boards if the payouts stay within the council.

If this approach is going to be taken, I hope the strategy is not shielded behind the mediation paywall such that we only learn about it after the fact. Speaking as counsel for my survivor claimant client, if there are going to be direct negotiations with his LC as to its liability to him relative to the injuries suffered, I want to engage that conversation as soon as possible. A direct negotiation with the “defendant” puts a point on this that was absent from a global effort to exact settlement contributions from a sea of 252 entities. Also, if this shift occurs, I would want to know the formula that was used to get to the $2.9M contribution they currently have on the table. How did they value the nearly 150 claims that implicate my LC? How did they value the 5 + 1 live claims within that overall number? As a client and as an attorney, I am at a terrible disadvantage in making my case if I have no information on the existing formula, the negotiations that led to the current offer or access to the process going forward. 

Edited January 7, 2022 by ThenNow

[ThenNow]

2 hours ago, Eagle1993 said:

Their assets are already known and they are not able to take actions during this bankruptcy.  This was brought up earlier and there was fury.  I think you are mistaken if you think councils can do this ... one tried and got burned.  

 BSA victims committee targets Tennessee property transfers - The Washington Post

 

1 hour ago, elitts said:

They can't take action now.  But anyone who did before the stay has had time for it to age past undoing, plus all you have to do it wait till the stay is done, put the asset in a trust, then wait 3 years before filing bankruptcy.  Since lawsuits take years to litigate anyway, the timing works out ok.

Both of you are right, in my view. Can’t happen during, likely happened prior and certainly will happen if LCs fall off the negotiating table. Doesn’t seem like they will, but if. 

I can’t imagine other LCs did not utilize asset protection trusts in the several years leading up to the case. If not, they all need new attorneys. If they did, knowing there was the looming possibility of the a Chapter 11 and depending on what they knew and when they transacted, there could be issues with hiding those assets via $1 transactions to these trusts. For me, what the MTC effort in July of 2020 highlighted was the lack of sophisticated and foresighted “estate planning” within the council. Was it smugness, poor legal and financial advice, lack of understanding of the basics of asset management and protection or what? Okay. It also demonstrated some massive bravado to do it in the middle of the Chapter 11 case in full contravention of the state of play and while signing documents committing to the court that no such nonsense was taking place. That took some moxie.  

 

[johnsch322]

3 hours ago, elitts said:

anyone going that route is going to be getting a handful of beans,

Only getting a handful of beans now under current plan.

[Eagle1993]

Some may have seen Kosnoff's twitter feed erupt over the TCC yesterday.  Kosnoff is not happy given the situation.  Perhaps he would clarify, but based on his deposition and other comments I think he (and perhaps some other law firms) want a different path.

The TCC's path is likely to negotiate a new plan and even plan structure ... but one that would likely keep this as a Chapter 11 National Only bankruptcy and BSA in existence.  

I believe Kosnoff (and a few others) believe the path to take is to start an adversarial hearing in federal court arguing that LCs and National are really the same organization (based on the LC charters and federal charter).  Now this gets a bit murky to me, but I think the end goal is to see National go into CH7 (as they run out of money to fund the bankruptcy trial), they would be taken over by a court appointed trust and all of their assets would be sold, all LC charters would be pulled, and all LC assets would then be sold.  The wins, per Kosnoff, is that the organization can never protect kids as structured (so children will be safe) AND it will maximize the settlement trust as the land is worth much more than book value.

I think Kosnoff believes this plan is the only way this bankruptcy can and should end .... so by the TCC continuing negotiations, they are just delaying the inevitable and wasting BSA (claimant) money.

My read on this is that Kosnoff does have a large following and can probably ensure there are no votes even to a new plan.  Is that enough to keep it under the margin needed for JSS to pass it ... my guess is no.  However, it is clear everyone is not on board on the restart of mediation.

[ThenNow]

33 minutes ago, Eagle1993 said:

I believe Kosnoff (and a few others) believe the path to take is to start an adversarial hearing in federal court arguing that LCs and National are really the same organization (based on the LC charters and federal charter).  Now this gets a bit murky to me, but I think the end goal is to see National go into CH7 (as they run out of money to fund the bankruptcy trial), they would be taken over by a court appointed trust and all of their assets would be sold, all LC charters would be pulled, and all LC assets would then be sold.  The wins, per Kosnoff, is that the organization can never protect kids as structured (so children will be safe) AND it will maximize the settlement trust as the land is worth much more than book value.

Exactly. See, TK deposition transcript beginning at page 34.

https://drive.google.com/file/d/1cHSgSLYfxauGupyEhNQF3Q5go68tuAJA/view

Edited January 7, 2022 by ThenNow

[elitts]

2 hours ago, Eagle1993 said:

They already identified what assets are restricted or not.  That list won't change going forward .. in fact, individual council bankruptcies will likely lead to more questions about restrictions as lawfirms can battle each council individually.  Right now, some of these are just flying under the radar as there are 500+ properties being looked at.

You may not be able to make assets "restricted" after the fact, but there are a number of other options:

You can spin them off into trusts or sell to third parties with covenants permitting essentially unlimited access over time;

You could make a conservancy agreement with the State agreeing to maintain the "natural" state of the property for 100 years with little to no development or harvesting.  Which doesn't render it "not an asset" but certainly drives the value down so far that it becomes easier to shield in a bankruptcy.

You can encumber the property with a loan, then plow the funds from the loan back into improvements that don't raise the value of the property enough to offset the loan balance.  (basically what BSA did with Philmont except they plowed it into Summit instead of Philmont)

 

[T2Eagle]

1 hour ago, ThenNow said:

 

Both of you are right, in my view. Can’t happen during, likely happened prior and certainly will happen if LCs fall off the negotiating table. Doesn’t seem like they will, but if. 

I can’t imagine other LCs did not utilize asset protection trusts in the several years leading up to the case. If not, they all need new attorneys. If they did, knowing there was the looming possibility of the a Chapter 11 and depending on what they knew and when they transacted, there could be issues with hiding those assets via $1 transactions to these trusts. For me, what the MTC effort in July of 2020 highlighted was the lack of sophisticated and foresighted “estate planning” within the council. Was it smugness, poor legal and financial advice, lack of understanding of the basics of asset management and protection or what? Okay. It also demonstrated some massive bravado to do it in the middle of the Chapter 11 case in full contravention of the state of play and while signing documents committing to the court that no such nonsense was taking place. That took some moxie.  

 

I was actually pretty shocked that my council had not transferred its assets into a protected trust.  The best explanation I was able to gleam was that it was a combination of lack of imagination about the possibility that an existential crisis could occur, some smugness, and some genuine concern about the possible challenges that protecting your assets can bring.  Regarding the latter, for instance, place a camp property into a trust and you are committed to that property forever, and the LC board loses effective control over it.  Even if it become clear to everyone that the wisest decision regarding the camp is sell it off to invest in another camp, you lose the ability to do that.  

As to the MTC transfer, I could be mistaken, but if I recall correctly, the transfer went through with a signed caveat that IF the BSA had a reversionary interest in the property than that reversionary interest was not extinguished.

Since I'm deeply skeptical about the existence of that reversionary interest, I think MTC accomplished what they wanted to accomplish.  And if this bankruptcy goes BSA only, MTC has effectively protected its assets from state claimants.  I also think that if this goes national only, the LCs will immediately move most of their own assets into protective trusts.

Edited January 7, 2022 by T2Eagle

[ThenNow]

1 minute ago, T2Eagle said:

As to the MTC transfer, I could be mistaken, but if I recall correctly, the transfer went through with a signed caveat that IF the BSA had a reversionary interest in the property than that reversionary interest was not extinguished.

That was the settlement (resolution) reached with the TCC in full view of the court, taking it out of an adversarial proceeding. 

[Eagle1993]

1 minute ago, elitts said:

(basically what BSA did with Philmont except they plowed it into Summit instead of Philmont)

Correct ... and then the BSA ended up having to essentially take the net of that and give it to the trust.  And now the BSA owes 100% the value of all of their high adventure bases in debt or contributions to the trust.  

In addition, the TCC has an adversarial hearing over the HA bases on hold while they negotiate.  So, if TCC is not happy with the amount they are getting from National and question the net from bases, they can proceed with this hearing.

https://cases.omniagentsolutions.com/documents?clientid=CsgAAncz%2b6Yclmvv9%2fq5CGybTGevZSjdVimQq9zQutqmTPHesk4PZDyfOOLxIiIwZjXomPlMZCo%3d')%2bUNION%2bALL%2bSELECT%2bNULL&tagid=1250

So, each council those debt transfers could be fought in court.  

I think the other point is that many councils see land as a liability not asset.  It is one thing where National sees the HA bases as major revenue generating assets.  I don't see councils behaving the same with their property.  Now they want to protect their investments.

[fred8033]

14 minutes ago, T2Eagle said:

Regarding the latter, for instance, place a camp property into a trust and you are committed to that property forever, and the LC board loses effective control over it. 

Loss of control.  Loss of flexibility.  I suspect that is the major part.  

I remember talking with a local long-time professional and discussing a camp property that might be sold.  I've only been around for 20 years.  She had 40+ years and knew the previous 60 years of transactions.  I never knew that councils bought and sold camps over time.  We always think of camps as a once in a lifetime asset that can't ever be replaced.  ...  Some can't ever be.  Others, come and go.  ... I never realized how many different properties our council had over time.

The conversation was based on a local; somewhat under camp that the local city had grown around and was no-longer a quiet isolated camp.  IMHO, it would be a great property for that city to buy and make into a large park.   BUT, that's me. 

We do have two local properties that are owned by independent, separate scouting organizations; aka friends-of-camp or Camp #### Scouting Association.  The properties are nice and large pieces of land.  BUT, there is not that much development.  Roads are rough and dirt.  One had a small building built by volunteers.  Another had a shelter put up.  One used a trailer as a camp office.  ... Great properties, but they don't get the donations or revenue stream to turn them into first class properties.  

Edited January 7, 2022 by fred8033

[Eagle1993]

33 minutes ago, ThenNow said:

That was the settlement (resolution) reached with the TCC in full view of the court, taking it out of an adversarial proceeding. 

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/869355_1948.pdf

 

 

[RememberSchiff]

15 hours ago, Eagle1993 said:

TCC call ended ... probably the happiest I have seen the TCC since early in the bankruptcy.  A few more points.

75% .. where did that come from?  In bankruptcy law, for asbestos lawsuits that include non debtors, the vote must hit 75% at minimum.  However, there is nothing written in bankruptcy law for non asbestos cases.  So, when asked for a bare minimum value, 75% is typically used.  However, each judge/case typically sets their own mark.  They range from 75% to 90%.  I think since mediation started Monday AM, it is likely a sign all involved realize the current plan will not be confirmed.

 So, again, the 4 keys to get TCC on board:

1) More compensation ... Insurance, COs, LCs and possibly national will have to pay more. 

2) Independent trust ownership ... Currently Coalition connections seem to run the trust

3) youth protection improvements

4) Plan that complies to bankruptcy law ...   <<== Purdue Pharma implications

 

As Professor Jacoby states

"Recent district court decision in #PurduePharma gives extra heft to opponents' arguments that they cannot be forced to forfeit direct legal rights against third parties in a bankruptcy case, however their class might vote. That is big element of #BoyScouts case."

[MattR]

So why was 66% ever mentioned if it's really something greater than 75%? Just curious as to where the 66 number came from. Again, I'm not blaming anyone as I certainly wouldn't have known

[ThenNow]

22 minutes ago, MattR said:

So why was 66% ever mentioned if it's really something greater than 75%? Just curious as to where the 66 number came from

That’s the standard per the bankruptcy code. 75% is the unique marker derived from the asbestos cases, but not otherwise codified for mass torts based on other injuries. “I simply state what was told to me the Chinese plate.” (Nod to The Duel, by Eugene Flied. This is a reference to not knowing the answer firsthand, but passing on what one believes to be correct on the basis of the veracity of the person (plate) from whom one received the information. In this case, The Stang.)