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Remember, the current process is that all parties are trying to negotiate an overall dollar amount that goes into a large trust.  The existence of fraud at this point is a factor that the trustee and judge take into account in determining the overall amount necessary to pay valid claims.  If the trustee/judge conclude that a percentage of the claims are likely to be fraudulent, they will order a smaller amount to go into the trust.  The insurance companies are just trying to lower the overall dollar amount of the trust at this point.  If their allegations prove true, the amount to fund the trust will indeed be smaller.  The BSA can simply let the insurance companies carry the burden of making those arguments.   The insurance companies only need to make a stastical case at this time supporting an overall fraud level.  The resistance on the part of claimant’s counsel is calculated to deny the insurance companies facts to argue fraud in the negotiation.

Individual claims will be processed only after the trust is established.  The trustee will evaluate the claims for truthfulness only at that time.  Those who have submitted fraudulent claims can be subjected to criminal or disciplinary penalties.  I once experienced a bankruptcy judge disbar from bankruptcy practice an opposing attorney for having encouraged his client to run up her charge cards just before filing a personal bankruptcy.  The lawyer lied about it to the judge.  When I brought the bankrupt client into court and she testified the guy told her to do it, he was banned from the court.  If the coalition attorneys conspired to defraud the court, they will eventually be held to account.
 

Claimant’s counsel, who hope to make billions and retire afterward,  might view professional discipline  as a cost of doing business if they are able to generate sufficient fees from their non-fraudulent claims.

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What is legally right is not always morally right.

I would encourage everyone to not ask @ThenNow to rehash particular circumstances. They can be found by patiently browsing his posts. From what I read, they were far from legal. His claim would have b

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34 minutes ago, CynicalScouter said:

We know what folks like Kosnoff want (zero assets) but what does the bankruptcy court want/is comfortable with? And the other plaintiffs lawyers?

No, Kosnoff, does not want 0 assets, he wants the complete and total dissolution of the BSA, and " if a new organization like the BSA is really needed, it starts from scratch." That is what he said on the Diane Rheem Show a while back.

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1 hour ago, fred8033 said:

does that mean that US government should be a co-defendant?

No. It is an honorific, nothing more, as the Congressional Research Service alluded to. And it is an anachronism

Quote

The chartering by Congress of organizations with a patriotic, charitable, historical, educational, or other eleemosynary purpose is essentially a 20th century practice.

...

The attraction of Title 36 status for national organizations is that it tends to provide an “official” imprimatur to their activities and, to that extent, it may provide them prestige and indirect financial benefit.

Congress, in chartering patriotic, charitable, professional, and educational organizations under Subtitle II, such as the Fleet Reserve Association (36 U.S.C. 701), does not make these organizations “agencies of the United States” or confer any powers of a governmental character or assign any benefits.13 These organization generally do not receive direct appropriations, they exercise no federal powers, their debts are not covered by the full faith and credit of the United States, and they do not enjoy original jurisdiction in the federal courts.

All a Congressional Charter does it authorize the entity to operate/do business. This is like arguing that you should be able to sue the Secretary of State of Delaware anytime a Delaware incorporated entity is a defendant in a lawsuit.

Today we think of incorporation as this easy thing to do. In early U.S. history corporations had to be chartered by the legislature one-by-one. (There's an old story about how Alexander Hamilton pulled a fast one on the New York legislature when he incorporated the Bank of New York and included language "or for any other lawful purpose" and use that as an excuse to build a water system that would never have otherwise been approved).

Most states have at this point enacted state laws of general incorporation. Go to the state's Secretary of State, pay your fee, file some paperwork and POOF you have an incorporated entity. The federal government has no such thing, thus federally incorporated entities must still be incorporated one-by-one by Congress.

 

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1 hour ago, Cburkhardt said:

The BSA can simply let the insurance companies carry the burden of making those arguments.

I think and I'd want clarity here there are three options.

1) BSA stays out of this, files nothing for or against insurance companies motions. The problem is that the media can and already has tarred BSA with "Denying victims" when it is the insurance companies making the argument.

2) File briefs in support of insurance company motions to reject/disqualify claimants.

3) BSA is somehow compelled by the court to file its statement for or against. I know sometimes the court has the power to ask for other party's input generally.

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The claimant's attorneys want the largest possible amount placed into a Victims Trust Fund, so they have the economic motivation to file as many claims as possible and argue that, within the totality of claims filed, all are valid.  The insurance companies want the lowest possible amount placed into the Victim's Trust Fund, so they have the economic motivation to uncover fraud and other facts that would diminish the value of the totality of claims filed.  In a way, the BSA is somewhere in-between, because it wants to see justice done for victims via payments, but also wants to retain sufficient funds and assets in order to reorganize post-bankruptcy.  The lawyers for claimants and the insurance companies will present effective arguments during the private negotiations from the extreme ends of the case -- indeed this is probably already going on.  If there is no agreement among the claimants, insurance companies and BSA, the Court will eventually decide what total amount it believes is required to fund the Victim's Trust Fund and force it on everyone in a process having the delightful technical term of "cramdown".  Or, the Court could determine there is a gross insufficiency of funds and the case could be dismissed and converted to liquidation.  As I've shared before in more detailed postings, despite the public relations rhetoric of some claimant attorneys, claimants would get less under liquidation because in liquidation BSA current and future retirees are in "first position" via a federal agency.

As to CynicalScouter's thoughts on the BSA expressing its views on the degree of fraud in a court filing, the BSA cannot be forced to do so and really would not benefit by doing so.  Whatever the BSA thinks about the veracity of the claims in totality can be argued privately during the negotiations.

One last item is that individual claims will not begin to be processed by the bankruptcy trustee until after the total amount of the Victim's Trust Fund is determined and mostly-funded.  At that point the BSA is more-or-less out of the situation, because it will be the claimant's attorneys vs. the bankruptcy trustee as to whether and how much an individual claimant should be awarded.  If the Trustee awards too much to individual claimants, it will drain the trust fund too quickly and run out of cash -- looking pretty stupid in the process.  If the trust fund was to run out, the BSA cannot be required to contribute more.  I suppose former BSA personnel or volunteers might be accessed as witnesses in those trustee proceedings, but the BSA and councils (only the ones that contribute to the trust fund) will have already had their liability discharged at that point. 

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10 minutes ago, Cburkhardt said:

As I've shared before in more detailed postings, despite the public relations rhetoric of some claimant attorneys, claimants would get less under liquidation because in liquidation BSA current and future retirees are in "first position" via a federal agency.

Right, this is why my Council Key-3 told us: the plaintiffs (or most) WANT a settlement that leaves BSA alive. Liquidation means Pension Benefit Guaranty Corporation comes to protect the BSA retiree/pensioners and they re first in line and plaintiffs/their attorneys get the scraps of whatever is left, which won't be much.

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1 hour ago, CynicalScouter said:

Right, this is why my Council Key-3 told us: the plaintiffs (or most) WANT a settlement that leaves BSA alive. Liquidation means Pension Benefit Guaranty Corporation comes to protect the BSA retiree/pensioners and they re first in line and plaintiffs/their attorneys get the scraps of whatever is left, which won't be much.

It's interesting.  Does that mean some BSA personnel might be for actual liquidation.

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5 minutes ago, fred8033 said:

It's interesting.  Does that mean some BSA personnel might be for actual liquidation.

No.

It means that in the event of liquidation, the Pension Benefit Guaranty Corporation (the federal agency responsible for insuring pension plans) goes to the top of the list of creditors and will be given/assigned sufficient money to fund the pensions of current and former BSA staff.

Whatever is left gets picked over by plaintiff's counsel.

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27 minutes ago, CynicalScouter said:

No.

It means that in the event of liquidation, the Pension Benefit Guaranty Corporation (the federal agency responsible for insuring pension plans) goes to the top of the list of creditors and will be given/assigned sufficient money to fund the pensions of current and former BSA staff.

Whatever is left gets picked over by plaintiff's counsel.

So those concerned about their pensions might favor liquidation?

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3 minutes ago, TAHAWK said:

So those concerned about their pensions might favor liquidation?

No, either way their pensions are covered.

BSA liquidates: Pension Benefit Guaranty Corporation steps in, gathers up whatever money is needed to fund the pensions, and the plaintiffs and their attorneys fight for scraps.

BSA reorganizes: The pensions remain insured by Pension Benefit Guaranty Corporation. Plaintiffs try to figure out how much of BSA they can carve out without outright killing it.

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Here's why liquidation hurts plaintiffs who want money, not vengeance.

Folks like Kosnoff want BSA dead, liquidated, and gone. That's great on the "vengeance" side, but it is lousy in terms of maximizing the amount of any Victims Settlement pool.

Let's play with some numbers.

Right now, there are $4.3 BILLION in claims against BSA.

BSA has total assets of $600 million to $1 billion (depending on who you ask and how you count it).

In the event of liquidation, Pension Benefit Guaranty Corporation is first at the trough and eats whatever of that $600 million is needed for the pension (which according to the latest 990 is about $9 million a year)

To fully fund the BSA pension might take $270 million ($9 million a year for 30 years).

$600-$270 = $330. So, almost half of whatever the plaintiffs want in terms of a victims compensation fund walks out the door.

Much better for BSA to survive and fund a victims compensation fund for $100 million a year for a few years.

 

 

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3 hours ago, CynicalScouter said:

I think and I'd want clarity here there are three options.

1) BSA stays out of this, files nothing for or against insurance companies motions. The problem is that the media can and already has tarred BSA with "Denying victims" when it is the insurance companies making the argument.

2) File briefs in support of insurance company motions to reject/disqualify claimants.

3) BSA is somehow compelled by the court to file its statement for or against. I know sometimes the court has the power to ask for other party's input generally.

BSA is quoted as saying they are deeply sorry for the abuse and expects that any irregularities among claims will be addressed as it works toward a settlement to compensate survivors.  My guess is they take the path as #1 as I don't see the settlement changing at all.  Basically, BSA will give everything it can (or is forced to) regardless of the numbers we are talking about.

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 Here is the answer to the question regarding whether BSA professionals/retirees would have an economic incentive to favor liquidation over reorganization.  If the pension benefit guarantee fund were to take over the account, the longer-time and higher-paid employees will have their monthly payouts significantly reduced.  Some of the monthly checks would get cut from the 15K-20K/ month range down to $5K/month.  So they overwhelmingly favor reorganization.  For lowest-paid  or short-term employees there is not much of an issue.

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47 minutes ago, CynicalScouter said:

 

Much better for BSA to survive and fund a victims compensation fund for $100 million a year for a few years.

 

 

That scenario assumes BSA would survive a post bankruptcy reorganization and be able to make future contributions to a fund. BSA's membership has declined for reasons other than just the abuse scandal. Corporate level fundraising has also declined, and I think it will be even harder to inspire donor enthusiasm when donations either directly or indirectly would fund compensation.  

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3 minutes ago, yknot said:

That scenario assumes BSA would survive a post bankruptcy reorganization and be able to make future contributions to a fund.

Right, and I suspect the court is going to consider that.

It may very well be this ends in liquidation. I just don't know. I do know it is in no ones interest (except as I said those like Kossnoff who simply want BSA dead).

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