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Chapter 11 announced - Part 11 - Judge's Opinion


Eagle1993

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2 hours ago, swilliams said:

By “mixed claims” do you mean claims where it’s not clear that the abuse happened within the context of scouting?  The Church and the scouting program were so intertwined, it would not be surprising if that were the case. 

Basically the LDS were attempting to clear out all claims where the youth was abused by a scout leader within the LDS.  She said that while it is ok to clear out claims from scouting activities, she cannot approve clearing claims where the abuse occurred outside of scouting.  

LDS will have a tough decision.   Do they pay $250M for significant protection or do they prepare for an onslaught of lawsuits.  They may face that onslaught regardless.  My guess is that they pull the $250M and become a non participating charter org.   

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14 minutes ago, Eagle1993 said:

Basically the LDS were attempting to clear out all claims where the youth was abused by a scout leader within the LDS.  She said that while it is ok to clear out claims from scouting activities, she cannot approve clearing claims where the abuse occurred outside of scouting.  

LDS will have a tough decision.   Do they pay $250M for significant protection or do they prepare for an onslaught of lawsuits.  They may face that onslaught regardless.  My guess is that they pull the $250M and become a non participating charter org.   

There’s little reason for them to participate now.  The judge appeared to characterize “pure scouting” claims as scenarios where non-LDS kids participate in LDS units and are victimized by LDS unit leaders.  This would likely be an infinitesimal percentage of claimants—the vast majority of claims involving LDS units will be “mixed claims”, because nearly all adult LDS males (including, sadly, the dirtbags who perpetrate SA) are ordained into the faith’s lay clergy.  

There’s simply no reason for the LDS church to help the BSA pay off the BSA’s obligation to LDS victims who are just going to turn around and sue the church for more anyways.  They may as well approach the victims with settlement offers directly (or, wait around to be sued).

Edited by FormerCubmaster
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30 minutes ago, FormerCubmaster said:

There’s little reason for them to participate now.  The judge appeared to characterize “pure scouting” claims as scenarios where non-LDS kids participate in LDS units and are victimized by LDS unit leaders.  This would likely be an infinitesimal percentage of claimants—the vast majority of claims involving LDS units will be “mixed claims”, because nearly all adult LDS males (including, sadly, the dirtbags who perpetrate SA) are ordained into the faith’s lay clergy.  

There’s simply no reason for the LDS church to help the BSA pay off the BSA’s obligation to LDS victims who are just going to turn around and sue the church for more anyways.  They may as well approach the victims with settlement offers directly (or, wait around to be sued).

The judge made it clear the BSA does not need the LDS $250M.  She stated there is enough $ in the plan without the LDS contribution.  I take that as a signal from her on a path out.  BSA is probably best off removing the LDS from the plan.   The LDS will face a surge of lawsuits but since they are not a currren CO there will be no negative impact to the BSA.

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7 minutes ago, Eagle1993 said:

The judge made it clear the BSA does not need the LDS $250M.  She stated there is enough $ in the plan without the LDS contribution.  I take that as a signal from her on a path out.  BSA is probably best off removing the LDS from the plan.   The LDS will face a surge of lawsuits but since they are not a currren CO there will be no negative impact to the BSA.

Indeed; and the LDS have ample resources to address this sort of thing.

If they bail, does that have any ramifications for other CORs?  My understanding was that early on, there was talk that the LDS offer was seen as a sort of benchmark that other CORs would be expected to meet (and kind of a high one, at that).  Does their absence create a space for the other CORs to renegotiate their own liability?

Edited by FormerCubmaster
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22 minutes ago, FormerCubmaster said:

If they bail, does that have any ramifications for other CORs?

I don't think so.  The LDS negotiation was unique in that it was directed to LDS claimants only.   The Methodist also settled which could be used as a benchmark.  

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15 hours ago, Eagle1993 said:

The judge made it clear the BSA does not need the LDS $250M.  She stated there is enough $ in the plan without the LDS contribution.  I take that as a signal from her on a path out.  BSA is probably best off removing the LDS from the plan.   The LDS will face a surge of lawsuits but since they are not a currren CO there will be no negative impact to the BSA.

But if a major CO pulled out of the plan, would not their insurers want to proportionately reduce their contribution to the settlement?

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2 hours ago, RememberSchiff said:

But if a major CO pulled out of the plan, would not their insurers want to proportionately reduce their contribution to the settlement?

No the insurance settlements clear the insurance company of a BSA claim. A claim against the CO who didn’t settle would have to be paid fully out of their own pocket. 

Edited by johnsch322
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On 7/30/2022 at 8:19 AM, ALongWalk said:

This doesn’t look good to me…I am not close to being educated on this though.

I think my LC could survive setting its claims. Maybe it is time for other LC’s to break away.

Most LCs couldn't financially handle one or two claims without going bankrupt.

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4 hours ago, johnsch322 said:

No the insurance settlements clear the insurance company of a BSA claim. A claim against the CO who didn’t settle would have to be paid fully out of their own pocket. 

The thing that has been most unclear to me in this whole process is what, who, and how the insurance contracts worked.  If the insurance policies named the COs as insured then their obligation to that CO should remain.  If the scouts indemnified COs and then insured themselves through their insurance than a non settling CO would have a claim against BSA for their exposure and they would become a creditor.

I suspect the answers to these questions and what the policies mean are essentially muck, and I suspect that litigation with non settling insurers will go on for years.

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5 hours ago, T2Eagle said:

I suspect the answers to these questions...

I suspect it has more to do with 3 walnut shells, a pea, and some fancy sleight-of-hand.

5 hours ago, T2Eagle said:

The thing that has been most unclear to me...

I agree.  There seems to be some huge disconnect between the insurers' contractual obligations and insurance coverage for the COs.

It seems that the settling insurers' contributions to the settlement fund severs their contractual obligations to both the LCs and the COs.  It sounds like National essentially negotiated the amount of the insurers' contributions (apparently a sweet deal for the the larger insurers) and the amount of the LCs' contributions (who all appear to have gotten on board in a trice), leaving the COs pretty much in the position of "settle on National's terms, or face 100% of the liability for all the claims filed against you-without benefit of any insurance coverage."  (A "Hobson's choice.)

How it is that the COs would lose their insurance coverage on account of a deal struck by National with the insurers escapes me.

Therein lies basis of the COs' argument of a constitutional challenge, namely, that they have been deprived of their property (insurance coverage) without due compensation (some credit against an abuse award entered against it).

Were there some formula establishing such a credit that would be accorded a non-settling CO, which has lost its insurance coverage, then arguably the non-settling CO would be getting some measure of compensation for the loss of its insurance coverage.

But this scheme would only beg the question in that the Survivor claimant would have to seek some measure of compensation from the settlement trust for that portion of the judgment awarded the Survivor is protected by the credit to the non-settling CO.

By way of example, a Survivor sues a non-settling CO and a $10 million judgment is entered against the CO.  Of that, assume that the CO receives a $3 million credit, and pays $7 million.  The Survivor would seek compensation from the settlement trust for the $3 million credit, and presumably, that compensation would bear some relationship to the insurance coverage lost by the CO, and by necessity, as the insurers have received a huge discount on their liability due to settling, that compensation would be some fraction of the $3 million.

The infirmity of this scheme is that National's bankruptcy turns into a partial bankruptcy and a partial non-bankruptcy.  And that looks like an unworkable mess to me.

And that is the best I can do to make sense of this at this point.

Hopefully , someone has greater insight than me.

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1 hour ago, SiouxRanger said:

It seems that the settling insurers' contributions to the settlement fund severs their contractual obligations to both the LCs and the COs.  ...   How it is that the COs would lose their insurance coverage on account of a deal struck by National with the insurers escapes me.  

My question is the reverse.  Even if the CO does not contribute, how does a claimant maintain standing to sue when the claimant settles for the same incidents with the underwriting parties that insure the CO.  The existing settlement seems like an agreed value of the damages and a closure of the claim.

It would be one thing if it was two completely independent entities being sued for the same incidents.  But with the underwriting relationship, I'm not sure how that happens.

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8 hours ago, T2Eagle said:

The thing that has been most unclear to me in this whole process is what, who, and how the insurance contracts worked.  If the insurance policies named the COs as insured then their obligation to that CO should remain.  If the scouts indemnified COs and then insured themselves through their insurance than a non settling CO would have a claim against BSA for their exposure and they would become a creditor.

I suspect the answers to these questions and what the policies mean are essentially muck, and I suspect that litigation with non settling insurers will go on for years.

The insurers were clear that their payments cover any liability they faced with respect to scouting abuse.  That is why the Roman Catholic Church fought the plan so long as they felt they were losing coverage.  Other LCs that didn't settle should have joined the Roman Catholics but likely did not understand the gravity of the situation.   The Roman Catholic were able to get a better deal than other LCs by fighting in court.  

I think the Elks probably recognize the issue they are about to face.  I'm not sure if others do yet. 

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So what happens next?

I know that's a very broad question, lol.  If the judge's opinion isn't 100% approval or denial of the plan, what needs to happen, and which entity needs to take the steps needed, to get to the end of the bankruptcy process and begin to settle with CSA victims?

Apologies, but I've been sort of following this off-and-on for the last half year.

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6 minutes ago, swilliams said:

So what happens next?

I know that's a very broad question, lol.  If the judge's opinion isn't 100% approval or denial of the plan, what needs to happen, and which entity needs to take the steps needed, to get to the end of the bankruptcy process and begin to settle with CSA victims?

Apologies, but I've been sort of following this off-and-on for the last half year.

It looks like the best approach is to fix the unapproved issues from the judge's ruling. The largest is working out the CJC/LDS issue.

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I'll attempt to explain my understanding of abuse claims going forward.  This is for child sex abuse claims related to scouting that occurred prior to February 2020.  This has nothing to do post Feb 2020 nor non abuse claims.

I look at this under two umbrellas.  One is liability and the other is insurance.  The liability is the individual or organization that pays under tort.  For example, for any case, there could be liability ranging from parent, perp, unit leaders, chartered org, local council and national BSA.  Depending on a specific case, a jury could assign liability to any one of these by %.  

Insurance is issued to institutions.  Depending on policy language, they could be on the hook to pay; however, the requirement to pay is really based on the tort decision.  If you are under insured or your insurance is already spent, you still need to pay or file bankruptcy (and then pay what you can).

See the image below for my understanding.  Green = fully covered post-bankruptcy.  Orange = not covered and could be sued 12 months post bankruptcy (in bankruptcy, COs are given 12 months to settle).  Pink = specifically targeted in plan for trustee to go after.  Note that I left LDS out as the judge rejected their settlement.

So, liability wise:

  • Protected from future lawsuits:
    • National, LCs and Methodist
    • All COs are protected post 1976 claims
    • Catholics if the claim would have been covered by a settling insurer
  • Not protected from future lawsuits
    • Perps
    • Chartered orgs (excluding Methodists & Catholics) for pre 1976 claims
    • Catholics from pre 1976 claims if those claims were not already covered by settling insurers

Insurance summary:

  • Settling insurers (regardless of who they insured) cannot be pursued for any coverage
  • Non settling insurers of perp could be pursued (by suing perp)
  • Non settling insurers of COs could be pursued for pre 1976 claims (by suing CO)
  • Post 1976 claims - Trustee will pursue non settling insurers for liability of CO, LC, National & volunteers) - As policy covered COs though National
  • Pre 1976 claims - Trustee will pursue non settling insurers for liability of LC, National & Volunteers - As policy only covered LCs & National

Hope this helps.  Let me know if you see issues or have questions as it is confusing.  I think the interesting point was the Catholic Church who managed to get coverage if their insurance settled.  All other COs lost that coverage by being a participating CO (which gave them protection post 1976) but gave them no backstop pre 1976.

 

bsa.jpg

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