Chapter 11 Announced - Part 10 - Post Confirmation Hearing/Judges Ruling

[MYCVAStory]

23 hours ago, Eagle1970 said:

It is the government pension oversight organization.  I'm no expert on this, but I believe the Pension fund would have fairly high priority in a Chapter 7 liquidation.

ALL secured creditors, of which pension recipients are one, would get priority over unsecured creditors.  Survivors are unsecured creditors.  As well, remember that JP Morgan and any other lenders are secured.  So, the mortgage that the BSA took out against the Philmont Property for example places JP Morgan in line ahead of Survivors.  This is why the "Just liquidate the BSA" argument makes sense emotionally for some but certainly not financially.  All of that said, any legal proceedings re Chapter 7 wouldn't fund secured creditors at 100% either.  They'd just be battling over assets ahead of others.

[Tron]

3 hours ago, MYCVAStory said:

ALL secured creditors, of which pension recipients are one, would get priority over unsecured creditors.  Survivors are unsecured creditors.  As well, remember that JP Morgan and any other lenders are secured.  So, the mortgage that the BSA took out against the Philmont Property for example places JP Morgan in line ahead of Survivors.  This is why the "Just liquidate the BSA" argument makes sense emotionally for some but certainly not financially.  All of that said, any legal proceedings re Chapter 7 wouldn't fund secured creditors at 100% either.  They'd just be battling over assets ahead of others.

There really isn't much battling though; if it would go to Chapter 7 a pecking order of age of debt would quickly set the winners vs losers; especially if there are multiple mortgages on properties.

[ScouterDavid]

33 minutes ago, Tron said:

There really isn't much battling though; if it would go to Chapter 7 a pecking order of age of debt would quickly set the winners vs losers; especially if there are multiple mortgages on properties.

I belive the pension plan is a single employer plan, so EVERY LC could be held liable for the pension plan funding. If this were to happen (PBGC takes over hte plan), it would surely bankrupt multiple LCs. Truly a disaster.

[fred8033]

9 minutes ago, ScouterDavid said:

I belive the pension plan is a single employer plan, so EVERY LC could be held liable for the pension plan funding. If this were to happen (PBGC takes over hte plan), it would surely bankrupt multiple LCs. Truly a disaster.

We are really extending a tangent.  ... but ... Would LCs be liable for pension?  If McDonalds went chapter 7 and had under funded corporate pensions, I don't think the mom&pop individual franchise stores would share the corporate pension debt.  Similar for BSA &LCs.  ... BUT ... that's a whole massive ugly wart of a debate we've had before.  The legal separation between BSA & LCs.

[Eagle94-A1]

Been a while since I worked for BSA, but I believe councils contributed to the national pension plan to cover their employees. Just as councils paid insurance money to National.

[MYCVAStory]

2 hours ago, Tron said:

There really isn't much battling though; if it would go to Chapter 7 a pecking order of age of debt would quickly set the winners vs losers; especially if there are multiple mortgages on properties.

Not necessarily at all.  In bankruptcy EVERYTHING is negotiable.  There are a whole host of factors that impact relief.  In some cases those "earlier" in line may agree to less quicker and avoid lengthy and expensive appeal.  There are a number of websites that cover this.

[Tron]

5 hours ago, MYCVAStory said:

Not necessarily at all.  In bankruptcy EVERYTHING is negotiable.  There are a whole host of factors that impact relief.  In some cases those "earlier" in line may agree to less quicker and avoid lengthy and expensive appeal.  There are a number of websites that cover this.

What you're talking about is an out of court agreement which prevents the bankruptcy from going into Chapter 7. Once a bankruptcy is accepted into Chapter 7 everything gets arranged into categories, then ordered in those categories for priority of repayment. To be clear, once a bankruptcy judge authorizes Chapter 7 it becomes a bankruptcy of winners and losers by order of importance and age.  As an example, if BSA were forced to file Chapter 7, and if it was accepted for Chapter 7 all secured debts/claims get absolute priority over unsecured, and older debts against those secured assets get priority. Using any BSA national properties with a mortgage as an example. Those mortgage lenders get priority before everyone else immediately; unconditionally, they just go to the top of the pecking order to get restitution on that debt; those mortgage lenders could potentially consume all of the value and leave nothing for lower prioritized secured debt holders (like 2nd or 3rd mortgages) and unsecured debt. 
 

[MYCVAStory]

11 minutes ago, Tron said:

What you're talking about is an out of court agreement which prevents the bankruptcy from going into Chapter 7. Once a bankruptcy is accepted into Chapter 7 everything gets arranged into categories, then ordered in those categories for priority of repayment. To be clear, once a bankruptcy judge authorizes Chapter 7 it becomes a bankruptcy of winners and losers by order of importance and age.  As an example, if BSA were forced to file Chapter 7, and if it was accepted for Chapter 7 all secured debts/claims get absolute priority over unsecured, and older debts against those secured assets get priority. Using any BSA national properties with a mortgage as an example. Those mortgage lenders get priority before everyone else immediately; unconditionally, they just go to the top of the pecking order to get restitution on that debt; those mortgage lenders could potentially consume all of the value and leave nothing for lower prioritized secured debt holders (like 2nd or 3rd mortgages) and unsecured debt. 

Well....no on a lot of counts.  First, and most importantly, a non-profit CANNOT be "forced" into an involuntary Chapter 7 proceeding.  Second, and again, any order is moot when agreements are made to expedite payment to some at lower amounts to include others.  Regardless, the BSA isn't going to be "forced" into bankruptcy and will do everything to avoid it.  As well, its creditors and local Councils will do the same.  Getting "priority" doesn't help if that gets you a property like the Summit where $400 million has been poured into it and it has been appraised at $40 million.  A LOT of this has been covered in the past and I too would encourage you to go back and check a lot of the threads over the past two years.  LOTS of excellent analysis by many.

[Eagle1993]

7 hours ago, Tron said:

What you're talking about is an out of court agreement which prevents the bankruptcy from going into Chapter 7. Once a bankruptcy is accepted into Chapter 7 everything gets arranged into categories, then ordered in those categories for priority of repayment. To be clear, once a bankruptcy judge authorizes Chapter 7 it becomes a bankruptcy of winners and losers by order of importance and age.  As an example, if BSA were forced to file Chapter 7, and if it was accepted for Chapter 7 all secured debts/claims get absolute priority over unsecured, and older debts against those secured assets get priority. Using any BSA national properties with a mortgage as an example. Those mortgage lenders get priority before everyone else immediately; unconditionally, they just go to the top of the pecking order to get restitution on that debt; those mortgage lenders could potentially consume all of the value and leave nothing for lower prioritized secured debt holders (like 2nd or 3rd mortgages) and unsecured debt. 
 

It is not clear how everyone would be treated.  

First regarding assets available.   Everything is sold.  However, there could be deed restrictions that will be fought in court over Philmont (and perhaps other based).  Those legal fights could take months to years.  What about Trademarks?  The Eagle Scouts rank could be valuable; however, does the congressional charter prevent that being sold to a for profit business?  Who knows what comes up.

Then on claims.  The TCC already filed an adversarial hearing over the JP Morgan debt.  That will go forward and there is definitely a decent chance some of that debt could be questioned and changed to unsecured.

Pensions... Read the attachment if you like.  Pensions are actually unsecured debt. That alone is a mess.

For claimants, far less will be available as many of the remaining assets will pay lawyers as the fight months and possibly years over the carcus of the BSA.  No one wins other than those who's primary goal is to kill the BSA.

Even then, BSA 2.0 would be created in parallel and perhaps even purchase some assets from BSA 1.0.  

At some point, Ch 7 may be slightly less worse than continuing to try and proceed with Ch11 for BSA.  I doubt we are close to that and don't see it was likely but there is always a chance.  060503_bleb_lewis.pdf

Edited June 17, 2022 by Eagle1993

[Tron]

11 hours ago, MYCVAStory said:

Well....no on a lot of counts.  First, and most importantly, a non-profit CANNOT be "forced" into an involuntary Chapter 7 proceeding.  Second, and again, any order is moot when agreements are made to expedite payment to some at lower amounts to include others.  Regardless, the BSA isn't going to be "forced" into bankruptcy and will do everything to avoid it.  As well, its creditors and local Councils will do the same.  Getting "priority" doesn't help if that gets you a property like the Summit where $400 million has been poured into it and it has been appraised at $40 million.  A LOT of this has been covered in the past and I too would encourage you to go back and check a lot of the threads over the past two years.  LOTS of excellent analysis by many.

I am literally telling you how the law works. No one needs to go back and read anything. It is really as simple as explained.

[Tron]

4 hours ago, Eagle1993 said:

It is not clear how everyone would be treated.  

First regarding assets available.   Everything is sold.  However, there could be deed restrictions that will be fought in court over Philmont (and perhaps other based).  Those legal fights could take months to years.  What about Trademarks?  The Eagle Scouts rank could be valuable; however, does the congressional charter prevent that being sold to a for profit business?  Who knows what comes up.

Then on claims.  The TCC already filed an adversarial hearing over the JP Morgan debt.  That will go forward and there is definitely a decent chance some of that debt could be questioned and changed to unsecured.

Pensions... Read the attachment if you like.  Pensions are actually unsecured debt. That alone is a mess.

For claimants, far less will be available as many of the remaining assets will pay lawyers as the fight months and possibly years over the carcus of the BSA.  No one wins other than those who's primary goal is to kill the BSA.

Even then, BSA 2.0 would be created in parallel and perhaps even purchase some assets from BSA 1.0.  

At some point, Ch 7 may be slightly less worse than continuing to try and proceed with Ch11 for BSA.  I doubt we are close to that and don't see it was likely but there is always a chance.  060503_bleb_lewis.pdf

"Everything is sold" is absolutely not correct. Lien holders, aka mortgage lenders can just say they want their property. If a property has multiple liens whether they are tax liens, mortgages, etc ... the oldest gets priority. Subsequent lien holders can ask that the liens stay on the property which can create a  "toxic asset". I know this for a fact as I use to work for the #1 toxic asset holding company in the country post 2008 housing crash. Nothing just gets liquidated, that is not how the process works at all. The right of first lien holder trumps everyone and everything. Those toxic assets are actually a very profitable enterprise as they are used to avoid paying income tax. So anyone who thinks there is a big payday over all of these mortgaged properties and physical assets that BSA and LC's own, you better keep your fingers crossed that LCs keep selling these things to pay cash into the settlement fund. 

[ThenNow]

10 minutes ago, Tron said:

I am literally telling you how the law works. No one needs to go back and read anything. It is really as simple as explained.

Q: Are you a federal Chapter 11 bankruptcy attorney that has worked on multiple large non-profit cases? Judge? Law professor? Paralegal? Clerk? WSJ Bankruptcy Pro reporter? Not poking, just asking. 

[Tron]

Just now, ThenNow said:

Q: Are you a federal Chapter 11 bankruptcy attorney that has worked on multiple large non-profit cases? Judge? Law professor? Paralegal? Clerk? WSJ Bankruptcy Pro reporter? Not poking, just asking. 

I am not doxing myself for your lack of understanding of the process. Everyone who hopes to get a payday out of this settlement had better pray tonight that BSA doesn't go into Chapter 7. 

[johnsch322]

5 minutes ago, Tron said:

Everyone who hopes to get a payday out of this settlement had better pray tonight that BSA doesn't go into Chapter 7. 

I may be mistaken but the entities that should be praying are the LC's, CO's and insurance companies.  Those of us in open states will soon have cases filed in State court (California by end of the year). A BSA Chapter 7 does not include anyone but National.

[Tron]

6 minutes ago, johnsch322 said:

I may be mistaken but the entities that should be praying are the LC's, CO's and insurance companies.  Those of us in open states will soon have cases filed in State court (California by end of the year). A BSA Chapter 7 does not include anyone but National.

I don't know about you, but the LC's in my state are basically broke, and just about everything they own is leveraged already.