Jump to content
KenD500

Charter Org bankrupt?

Recommended Posts

Our current chartered organization is currently facing financial troubles.  The other post regarding the relationship between the CO & the Troop got me thinking.

 

IF the CO declared bankruptcy, can the Troop's equipment, bank account, etc. be used by the CO to pay off the debt? 

 

Our bank account & resale value of the equipment is small but I'm thinking it COULD happen.

 

Anyone ever have this happen to them? 

Share this post


Link to post
Share on other sites

Our current chartered organization is currently facing financial troubles.  The other post regarding the relationship between the CO & the Troop got me thinking.

 

IF the CO declared bankruptcy, can the Troop's equipment, bank account, etc. be used by the CO to pay off the debt? 

 

Our bank account & resale value of the equipment is small but I'm thinking it COULD happen.

 

Anyone ever have this happen to them? 

 

No, but I know units that have.

 

I would build a "friends of" organization now and put any spring sales revenue there. Check with a tax attorney to see how that would work. I know of one unit that did that. 

Share this post


Link to post
Share on other sites

The cash is especially vulnerable, probably no one would want anything else and the Fair Market Value is probably zero, if you have a trailer that might also be at risk.

 

Maybe find another CO, maybe especially one that already charters a troop and see if they'll take you on temporarily.  I would think that would be easier and quicker than being a "friends of."  Make sure your Council, not just the DE but someone like the SE and a Board Member know what's going on.  They have a vested interest in keeping units whole.

 

One interim solution might be to park your cash with the council.  In our council most troops have an account at the scout shop that has money in it that can then be used to pay council bills, not just awards but also camping fees for weekends, summer camp etc.  You could probably prepay some summer camp fees, maybe even prepay some rechartering.  We have a limit from the diocese as to how much cash we are allowed to have on hand for an extended period of time and we have looked at doing things like this but never actually had to.

  • Upvote 1

Share this post


Link to post
Share on other sites

 

Maybe find another CO, maybe especially one that already charters a troop and see if they'll take you on temporarily. 

 

Great advice!!!

Share this post


Link to post
Share on other sites

I would also caution evacuating bank assets in that it could appear to the debtors that money is being hidden from bankruptcy disclosure.  The courts might wish to know whose fingerprints are on such activities.  Even if one "switches CO's" the money still belongs to the original CO that is having the financial difficulties. 

 

Hiding assets might not bode well in the local media if it is disclosed that the local Boy Scout troop is walking off with the money that doesn't belong to them.

 

Play it any way one wishes, just don't be surprised what happens when people start playing games with money.

  • Upvote 1

Share this post


Link to post
Share on other sites

I would also caution evacuating bank assets in that it could appear to the debtors that money is being hidden from bankruptcy disclosure.  The courts might wish to know whose fingerprints are on such activities.  Even if one "switches CO's" the money still belongs to the original CO that is having the financial difficulties. 

 

 

Depends doesn't it? If the current CO says "Okay, you can go and take your gear." then they are gifting the gear to the unit. It would have to be claimed by the new CO, but I would think they could do that.

Share this post


Link to post
Share on other sites

An institution that is dumping their assets and cash to protect it from debtors in a bankruptcy proceeding could be kinda sketchy.  I guess I would like to have a pretty good distancing of myself from such things.  A friend of mine needed his car repaired so he took it down to the repair shop.  They parked it inside the bay to be repaired the next day.  Oops, the shop went bankrupt.  Well my friend just lost his car.  These things can be brutal.

Share this post


Link to post
Share on other sites

Depends doesn't it? If the current CO says "Okay, you can go and take your gear." then they are gifting the gear to the unit. It would have to be claimed by the new CO, but I would think they could do that.

 

Bankruptcy laws regulate transfers of money or property "in contemplation of bankruptcy" to prevent distributions contrary to the system of priorities under those laws.

 

 

 

An institution that is dumping their assets and cash to protect it from debtors in a bankruptcy proceeding could be kinda sketchy.  I guess I would like to have a pretty good distancing of myself from such things.  A friend of mine needed his car repaired so he took it down to the repair shop.  They parked it inside the bay to be repaired the next day.  Oops, the shop went bankrupt.  Well my friend just lost his car.  These things can be brutal.

 

Too bad he didn't consult a competent attorney.

Edited by TAHAWK
  • Upvote 2

Share this post


Link to post
Share on other sites

An institution that is dumping their assets and cash to protect it from debtors in a bankruptcy proceeding could be kinda sketchy.  I guess I would like to have a pretty good distancing of myself from such things.  A friend of mine needed his car repaired so he took it down to the repair shop.  They parked it inside the bay to be repaired the next day.  Oops, the shop went bankrupt.  Well my friend just lost his car.  These things can be brutal.

This is of topic, but something doesn't ring true here. You don't transfer ownership of your vehicle to the shop when you take it in for repairs. There is no way shop's creditors can claim the vehicle in settlement. It still belongs to your friend unless there is some sort of unpaid repair bill.

Share this post


Link to post
Share on other sites

Our current chartered organization is currently facing financial troubles.  The other post regarding the relationship between the CO & the Troop got me thinking.

 

IF the CO declared bankruptcy, can the Troop's equipment, bank account, etc. be used by the CO to pay off the debt? 

 

Our bank account & resale value of the equipment is small but I'm thinking it COULD happen.

 

Anyone ever have this happen to them? 

I agree with those who said transferring the money to another account or CO was a bad idea. Bankruptcy court may well go after it. Your equipment is (probably) not going to be taken.

 

My two cents: spend down the money for legitimate uses, defer the collection of dues from members, and whatever you do, don't let any money you collect for summer camp sit in the Troop account.

Edited by meschen

Share this post


Link to post
Share on other sites

My two cents: spend down the money for legitimate uses, defer the collection of dues from members, and whatever you do, don't let any money you collect for summer camp sit in the Troop account.

 

Only real option.  Dollars in bank are for that purpose.  Prepay your summer camp bill.  Pay "legitimate expenses".  Route incoming dollars to a new account or to a new CO account.  

Share this post


Link to post
Share on other sites

Only real option.  Dollars in bank are for that purpose.  Prepay your summer camp bill.  Pay "legitimate expenses".  Route incoming dollars to a new account or to a new CO account.  

I would still be careful. "Route incoming dollars to a new account or a new CO" still sounds like hiding money from the bankruptcy court. Remember, it's all still the CO's money, even if you put it in a different account.

Share this post


Link to post
Share on other sites

Only real option.  Dollars in bank are for that purpose.  Prepay your summer camp bill.  Pay "legitimate expenses".  Route incoming dollars to a new account or to a new CO account.  

 

Again, problematic under federal bankruptcy laws designed to share the debtor in bankruptcy's assets according to priorities set by federal law.

Share this post


Link to post
Share on other sites

Again, problematic under federal bankruptcy laws designed to share the debtor in bankruptcy's assets according to priorities set by federal law.

 

I think timing is an issue that can be worked around.  If the CO is having "financial difficulties" and may be heading towards bankruptcy, one can take some evasive action, but once bankruptcy has been declared, all bets are off.

Share this post


Link to post
Share on other sites

Question for the lawyers here: If an organization NOT in bankruptcy yet, but appears headed in that direction; could a Scout unit really be exposed to liability if they asked the CO (and were granted a release) to go elsewhere?

 

Question for the person in trouble: Does the CO know they own your gear and assets? Most COs I know don't know that, so they would not count the scout gear as assets.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×