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mashmaster

Chapter 11 announced

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Hmmmmmm.......... the Summit has a presidential help pad "in case a president wants to visit";  still building huge structures with theater seating, a dining facility and lodging,  but the BSA has declared bankruptcy.   The announcement specifically denied that the BSA owns the individual councils.  Councils pay a required fee for each member and the national beurcraticy dictates what local regions, sections, and councils need to do.  But.........BSA does not, in any shape or form, own the local council.   This is very interesting to me.

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1 hour ago, Liz said:

Our Council made it very clear in a letter sent out today that their assets are entirely separate from National. 

I suppose any Council could also be named in a suit, but each Council is its own legal and financial entity, and not financially responsible for the actions of Scouters in other councils. 

I'm on the distribution list for 4 councils here in MA.  Every council sent the same notice, they are all cookie-cutter template.  It is the argument that National will use and maintain for as long as possible through this process.

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Is there a precedent? Is there another financial web that is this tightly dependent on each node and yet claim independence? Mary Kay? Franchises? If a couple of franchises of a restaurant sell burgers with mouse feet in them and the main company covers it up what happens? Especially where, if a franchise looses it's licence, all the assets go to the parent company.

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6 hours ago, MattR said:

Is there a precedent? Is there another financial web that is this tightly dependent on each node and yet claim independence? Mary Kay? Franchises? If a couple of franchises of a restaurant sell burgers with mouse feet in them and the main company covers it up what happens? Especially where, if a franchise looses it's licence, all the assets go to the parent company.

The NFL? Not sure about assets, but definitely dependent of parent company.

Edited by DuctTape

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@Cburkhardt

i was thinking the comparison would be

National to Councils.....National gets sued and files bankruptcy.  Councils are where the crimes were and are committed and covered up

Vatican to Dioceses...Diocese gets sued and files bankruptcy.  Dioceses are where crimes and act were and are committed and covered up.

Neither can separate themselves from each other with regard to responsibility and immunity.   JMHO

 

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20 hours ago, Jackdaws said:

I also expect some snide comments from people to the scouts who are out there currently trying to sell camp cards.  You know the whole " why should I pay for an organization who abuses kids? " or something to that effect.  It is not the scouts fault and their adults are forced to step in and try to get them to move along.  

Sigh. 

We just modified our mulch fundraiser flyer to indicate that all funds stay with our troop.

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Mitchell Garabedian ,a Boston lawyer who has gained international recognition for representing more than 1,000 victims of the Catholic Church clergy sexual abuse,  (you may recall his name from the movie Spotlight) said the question now is whether local councils should be held responsible. Churches that may sponsor troops where victims were abused may also be held liable. He said they are a link in the chain of sexual abuse that happened over the course of decades. He said some may want to join the bankruptcy for protection.

“If local councils are separate corporations, which they usually are, they could say, ‘We want to be part of the bankruptcy protection, so we’re going to provide some assets,’ ” Garabedian said. “It’s called channeling injunctions. It happens in many other bankruptcies.”

....

The BSA recently established Ad Hoc Committee of Local Councils, an informal volunteer committee consisting of eight councils from around the country which is intended to give the 261 local councils as a group, a “voice” in the national organization’s Chapter 11 proceedings.

https://www.telegram.com/news/20200218/will-boy-scouts-bankruptcy-potential-lawsuits-affect-local-councils

 

Edited by RememberSchiff

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I find it interesting that the top three unsecured creditors listed in the bankruptcy filing are three former CSEs (Roy Williams 2000-2007 for $2.4MM, Bob Mazzuca 2007-2012 for $1.6MM, and Wayne Brock 2012-2015 for $1.14MM), and that Mike Surbaugh is #8 on that list (for about $700 thousand). Presumably that's expected liability under a pension or executive deferred-compensation plan. 

I'm not sure how I feel about that, or how relevant it is.  On the one hand, it shows that the National Council may be an example of "you can't get blood out of a stone", relatively. Michigan State University settled an abuse-lawsuit with one primary abuser (although there were criminal charges against his supervisor and higher in the administration) and about 330 alleged victims for $500MM.  Here there are likely at least 5,000 alleged abusers (as documented in the IVF), possibly thousands more (if the lawsuits bring in a lot of alleged abusers who were never documented in the IVF, or were purged prior to the mid-80s due to age or death), and likely at least 5,000 alleged victims (although there was probably a little bit of overlap where a victim was abused by more than one person who was, had been, or would be a registered BSA volunteer, or who had been a registered BSA youth, that's certainly balanced out by cases when one adult abused multiple victims.)  Suppose the cash on hand and liquid personal property is about equal to the total of the unsecured claims, and the camp properties don't actually net more than what's owed on them when sold. That would be maybe $1000 per victim, before even paying the lawyers. Or suppose the secured claims are disallowed (under some theory that the secured creditors were complicit in the abuse), and Bechtel is sold for its full cost to develop.  That might free up enough cash to pay about $200 thousand per victim, still significantly less than MSU's settlement.

On the other hand, maybe those CSEs should be liable somehow, and their pensions should be in jeopardy. BSA's own analysis shows a significant, although not total, drop in abuse reports right around 1990 ("30 years ago"). The four living ex-CSEs served in that office well after that, but they were all Professional Scouters before that date.  Mr. Surbaugh's pension will pay perhaps $100 per likely victim, Mr. Williams's about $500.

Perhaps a fair overall settlement should assign liability to a lot of other parties as well:

  • The local council where each abuser was serving, or had last served, when the abuse occurred;
  • The local council where each abuser had originally registered as an adult, if different;
  • The local council where each abuser had been registered as a youth, if he had a history as a Boy Scout himself;
  • The chartered organization with whose unit each abuser was serving, or had last served, when the abuse occurred;
  • The chartered organization with whose unit each abuser had originally registered as an adult, if different;
  • The chartered organization for the unit where the abuser had been registered as a youth;
  • If the chartered organization is defunct, but was effectively subject to some control by and operating according to the teachings of some parent body (for example, a congregation of a church, or a Catholic diocese), that parent organization;
  • If the abuser had some professional license or credential before he registered and committed the abuse, the body that issued the license or credential.
  • If the abuser was working in some position of responsibility over children, the employer.

(Regarding the last two point, take the example of Robert E White, who, in 1986, "had been the subject of two police investigations since 1975, was dismissed from three health facilities for alleged misconduct with young males, and changed his name from McPherson to White to avoid 'scandalous accusations' - but nonetheless managed to retain his state nursing license. When arrested, he worked at a Ferndale psychiatric hospital and as a Mt. Clemens Scout leader.")

Edited by DavidLeeLambert

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11 hours ago, Eagle1993 said:

They listed HA values here:

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/799102_20.pdf

 

Northern Tier - $6.6M

Sea Base $16.7M

Philmont $40.1M

The Summit high adventure facility is in a separate legal entity, Arrow WV.  BSA has a note receivable due from Arrow.

The note due from Summit is $345M

So, total for HA bases = $408.4M out of total Assets of $1.01B

 

Note due from Summit?  Is that indicating that Arrow WV basically borrowed money from BSA and that is "due" at some point as retired debt from operations and donations?

Thus BSA is listing that "receivable" from Summit (Arrow WV) as the asset for the site?

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18 minutes ago, Jameson76 said:

Note due from Summit?  Is that indicating that Arrow WV basically borrowed money from BSA and that is "due" at some point as retired debt from operations and donations?

Thus BSA is listing that "receivable" from Summit (Arrow WV) as the asset for the site?

Correctamundo.  Do you think we can get out of this whole thing by transferring that "receivable" to the victim's fund? Good luck collecting on that.

I also noted that they specifically noted that they did not include Oil & Gas Royalties or the Artwork - Original Rockwell paintings on their asset list.  I wonder why they could do that.

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59 minutes ago, RememberSchiff said:

Mitchell Garabedian ,a Boston lawyer who has gained international recognition for representing more than 1,000 victims of the Catholic Church clergy sexual abuse,  (you may recall his name from the movie Spotlight) said the question now is whether local councils should be held responsible. Churches that may sponsor troops where victims were abused may also be held liable. He said they are a link in the chain of sexual abuse that happened over the course of decades. He said some may want to join the bankruptcy for protection.

“If local councils are separate corporations, which they usually are, they could say, ‘We want to be part of the bankruptcy protection, so we’re going to provide some assets,’ ” Garabedian said. “It’s called channeling injunctions. It happens in many other bankruptcies.”

...

This is where the bankruptcy can get very large & complex.  I also think it could damage the whole idea of charter organizations.  When they start seeing various clubs, churches, etc. pulled into the bankruptcy, expect many COs to question keeping Troops & Packs.  BSA should be ready for another model, similar to GSUSA, where councils directly charter units. 

I also think it is a bit early for nearly every council to essentially guarentee they are not going to be impacted by this lawsuit.  If a council has plaintiffs, is located in a state that has no limit on statue of limitations & has big resources ... they will be a target.  I understand why they are coming out strong on these statements, and support them, but they probably know there is signficant risk.

The good news is that it seems like courts see Catholic Dioceses and Parishes as independent entities … making lawyers sue them individually and working on independent settlements.   It seems to be dragging them out, but it also seems to allow most services to go uninterrupted ... perhaps a bit of light for us.

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1 hour ago, Jameson76 said:

Note due from Summit?  Is that indicating that Arrow WV basically borrowed money from BSA and that is "due" at some point as retired debt from operations and donations?

Thus BSA is listing that "receivable" from Summit (Arrow WV) as the asset for the site?

 

46 minutes ago, Eagle1993 said:

Correctamundo.  Do you think we can get out of this whole thing by transferring that "receivable" to the victim's fund? Good luck collecting on that.

I also noted that they specifically noted that they did not include Oil & Gas Royalties or the Artwork - Original Rockwell paintings on their asset list.  I wonder why they could do that.

That's insane - The Summit high adventure facility is in a separate legal entity, Arrow WV.  BSA has a note receivable due from Arrow.  The note due from Summit is $345M.  Did I mention that's insane?  The folks responsible (Professional BSA / Volunteers / Board Members / etc) they should be in court for being insane.

No way on God's Green Earth that patch of WV is worth anywhere near that amount of money.  So Bankruptcy is what happens when you throw all your money down a rathole

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4 minutes ago, Jameson76 said:

 

That's insane - The Summit high adventure facility is in a separate legal entity, Arrow WV.  BSA has a note receivable due from Arrow.  The note due from Summit is $345M.  Did I mention that's insane?  The folks responsible (Professional BSA / Volunteers / Board Members / etc) they should be in court for being insane.

No way on God's Green Earth that patch of WV is worth anywhere near that amount of money.  So Bankruptcy is what happens when you throw all your money down a rathole

Here is Arrow WV, INCs latest 990.

http://990.erieri.com/EINS/270441319/270441319_2017_0fcc3073.PDF

They are claiming it is worth $385M (after depreciation).

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2 minutes ago, Eagle1993 said:

Here is Arrow WV, INCs latest 990.

http://990.erieri.com/EINS/270441319/270441319_2017_0fcc3073.PDF

They are claiming it is worth $385M (after depreciation).

Interesting

  • Land - $121 million (how much is there like 10,000 acres??) - $12,000 per acre?
  • Buildings - $136 million - Assuming a very generous $135 per SF for space - do we really have 1,000,000 SF of space there??
  • Leasehold Improvements - $108  million that seems like a lot for infrastructure
  • Equipment - $13  million that is equivalent to 130 of the most expensive 2020 Corvettes (C8)

Philmont must be undervalued

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33 minutes ago, Jameson76 said:

 

Did I mention that's insane?  The folks responsible (Professional BSA / Volunteers / Board Members / etc) they should be in court for being insane.

 

Maybe so, but I would settle for their removal from any further office of responsibility in scouting.  True insanity would be to allow them to continue in office.

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