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Cburkhardt

You Solve It -- A likely Bankruptcy Scenario

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21 hours ago, ParkMan said:

I understand your point - I think you are defining a new Scouting model - a confederation of councils based on the same program and materials.  Maybe 50 or 100 different councils that all use the same program and function independently.  I would think that even if such a model were to occur that they would derive representation in the WOSM through a central organization.  From the WOSM website:

What would be the value to 50 or 100 local councils in the US to all join individually?  What would be the value to the WOSM?  Does Scouts UK really want to have individual relationships with a whole bevy of US councils?  I suspect not.

I expect that if 50 councils buy the IP rights of the BSA, they will create a small central organization to co-ordinate that work.  Place the international representation of the US based former BSA councils in that entity.

 

Actually I'm not proposing a federation of councils.  If the National Council of the BSA were to be dissolved, there are no more regions, areas, or councils as we understand them today.  What we call Councils today are independent Not-for-profit corporations licensed by the National Council (which in this scenario no longer exists) to deliver scouting.  Areas and Regions have no meaning outside of the national organization because they are ust amalgamations of Councils, which are now undefined.  Without National, there are just 270-odd NFP corporations scattered around the country that used to be licensees of the now defunct BSA, desperate to survive or merge.  

So let's assume the 270 NFPs are all given the BSA IP to use as their own.  This is where the Thunderdome really gets rolling.  Former boundaries are meaningless.  Former relationship to the BSA is meaningless.  The first mover gets the spoils.  It's not too hard to imagine the NFPs in TX and OK merging into a much leaner organization known as the Red River Scouts of America, recruiting all the units possible within their former boundaries to be part of their program.  Nearly all units agree because the RRSA owns the local rights to Eagle.  With a critical mass of scouts, the RRSA ultimately consumes/recruits all the NFPs all the way up through the Dakotas to deliver the RRSA program, ultimately changing it's name to the Great Plains Scouts of America.    In the northeast the same dynamic plays out with the formation of the New England Scouts of America around NY and points north, ultimately growing south through PA, MD, DE, and DC.  It's not hard to imagine 5 or 6 new independent regional scout organizations in the US that have limited incentive to cooperate/coordinate since they all have the same rights to the IP.  As the programs strengthen and diverge they'd start selling their brands across the country.

This scenario is effectively the Power-5 Football Conference model (humor me and let's leave B1G and Pac-12 in the mix for now).  You could argue that they submit to the NCAA so the scouting model would dictate a master organization.  But, I believe the scouting model would play out differently because 1) no national scouting organization is going to spread money around like the NCAA, and 2) each of the regional scouting organizations would have everything they need with regards to IP.

As for WOSM, it's an international bureaucracy that will go where the money leads them in order to perpetuate their existence.  They'd be recruiting the new regional organizations in the US, not the other way around.  Beyond that, WOSM has already set the standard for membership.  I'm going by what's on wikipedia, so take that into account, but that page lists 40 different scouting organizations in the European Region (again, roughly the same geographical size as the US or certainly North America).  According to the page of Liechtenstein, their organization only has 1,100 members.  The wikipedia page for WOSM member Scouts Ireland list 40,000 youth members.  So, Scouts UK already has relationships with a large number of small member organizations.  Admitting regional US scouting organizations as members would only be exceptional because of WOSM's Nationalistic bias.  And that assumes the US regional organizations even cared about WOSM at all.  My money says the GPSA tells WOSM to get off.

Now if the BSA IP goes to auction, we'll all be part of the LDS Scouts of America in the near future.  And Philmont would be open.  But, that's another thread. :)

 

 

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11 hours ago, Owls_are_cool said:

I love scoutbook for tracking advancement. Hopefully, the national council is dedicating significant resources to moving my.scounting.org functions over to this platform. Camping and service logs were perfect in scoutbook two years ago and I think the change made this year was a step backwards. If they need alpha testers, I can volunteer to do that.

I would be interested to know how technology is faring in the recent rounds of cutbacks.  I have to imagine that plans around Scoutbook will be severely curtailed at this point in time.

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1 hour ago, walk in the woods said:

Actually I'm not proposing a federation of councils.  If the National Council of the BSA were to be dissolved, there are no more regions, areas, or councils as we understand them today.  What we call Councils today are independent Not-for-profit corporations licensed by the National Council (which in this scenario no longer exists) to deliver scouting.  Areas and Regions have no meaning outside of the national organization because they are ust amalgamations of Councils, which are now undefined.  Without National, there are just 270-odd NFP corporations scattered around the country that used to be licensees of the now defunct BSA, desperate to survive or merge.  

So let's assume the 270 NFPs are all given the BSA IP to use as their own.  This is where the Thunderdome really gets rolling.  Former boundaries are meaningless.  Former relationship to the BSA is meaningless.  The first mover gets the spoils.  It's not too hard to imagine the NFPs in TX and OK merging into a much leaner organization known as the Red River Scouts of America, recruiting all the units possible within their former boundaries to be part of their program.  Nearly all units agree because the RRSA owns the local rights to Eagle.  With a critical mass of scouts, the RRSA ultimately consumes/recruits all the NFPs all the way up through the Dakotas to deliver the RRSA program, ultimately changing it's name to the Great Plains Scouts of America.    In the northeast the same dynamic plays out with the formation of the New England Scouts of America around NY and points north, ultimately growing south through PA, MD, DE, and DC.  It's not hard to imagine 5 or 6 new independent regional scout organizations in the US that have limited incentive to cooperate/coordinate since they all have the same rights to the IP.  As the programs strengthen and diverge they'd start selling their brands across the country.

This scenario is effectively the Power-5 Football Conference model (humor me and let's leave B1G and Pac-12 in the mix for now).  You could argue that they submit to the NCAA so the scouting model would dictate a master organization.  But, I believe the scouting model would play out differently because 1) no national scouting organization is going to spread money around like the NCAA, and 2) each of the regional scouting organizations would have everything they need with regards to IP.

As for WOSM, it's an international bureaucracy that will go where the money leads them in order to perpetuate their existence.  They'd be recruiting the new regional organizations in the US, not the other way around.  Beyond that, WOSM has already set the standard for membership.  I'm going by what's on wikipedia, so take that into account, but that page lists 40 different scouting organizations in the European Region (again, roughly the same geographical size as the US or certainly North America).  According to the page of Liechtenstein, their organization only has 1,100 members.  The wikipedia page for WOSM member Scouts Ireland list 40,000 youth members.  So, Scouts UK already has relationships with a large number of small member organizations.  Admitting regional US scouting organizations as members would only be exceptional because of WOSM's Nationalistic bias.  And that assumes the US regional organizations even cared about WOSM at all.  My money says the GPSA tells WOSM to get off.

Now if the BSA IP goes to auction, we'll all be part of the LDS Scouts of America in the near future.  And Philmont would be open.  But, that's another thread. :)

Ahh - I see.  You're suggesting that the WOSM just sit back for 5 years while the councils realign themselves in that scenario.  I have to imagine that in this scenario it will be like the breakup of the Bell System.  In 20 years we'd be back to a handful of NFPs that have acquired all the others.  I can see how that works.

FWIW, I can't imagine the BSA IP simply being given away.  Perhaps councils band together to purchase it, but there is just about no chance the bankruptcy court says - hey you 270 NFPs you all get the share this IP that has monetary value.  But, to your other comment - that's a topic for another thread.

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There won’t be 270 councils when the bankruptcy is discharged.  There’ll be somewhere between 150-250. The rest will, as the scenario describes, merge or liquidate.  
 

The IP depends on folks to write and maintain it.  I don’t care if we are talking training content or the software. Who will do this, and how will they be compensated?

I ask this question in all seriousness. 

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If National gets through reorganization, it will retain the IP as a core property for future operations.  If National is liquidated, the IP will be sold in bankruptcy like all of the other assets.  A group of going-forward councils that have survived and received individual third party discharges could bid.   Other purchasers could outbid a council group, so there is no guarantee that a Scouting-related group would be in control of it.  

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1 hour ago, John-in-KC said:

The IP depends on folks to write and maintain it.  I don’t care if we are talking training content or the software. Who will do this, and how will they be compensated?

Scouter.com?

1 hour ago, John-in-KC said:

I ask this question in all seriousness. 

Oh, sorry.

But, to answer seriously, I suspect that if it's a phone company style breakup then the councils will have to agree on any changes. It will be bureaucratic to some extent but the bigger councils may end up with more say. Some councils might just split off. They might want to adapt it so different councils can make changes.

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On 9/10/2020 at 11:10 AM, Cburkhardt said:

If National gets through reorganization, it will retain the IP as a core property for future operations.  If National is liquidated, the IP will be sold in bankruptcy like all of the other assets.  A group of going-forward councils that have survived and received individual third party discharges could bid.   Other purchasers could outbid a council group, so there is no guarantee that a Scouting-related group would be in control of it.  

This is the real answer. Unless the Court specifies a bidding structure, the BSA IP, in liquidation, could go anywhere.

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8 minutes ago, John-in-KC said:

This is the real answer. Unless the Court specifies a bidding structure, the BSA IP, in liquidation, could go anywhere.

Except, and this is the big exception, that the IP is defined by statute and therefore cannot go beyond the corporation created by statute. The Bankruptcy court cannot override a statute unless it somehow held the provision unconstitutional (it won't).

https://www.law.cornell.edu/uscode/text/36/30905
 

Quote

The corporation has the exclusive right to use emblems, badges, descriptive or designating marks, and words or phrases the corporation adopts. This section does not affect any vested rights.

The corporation is defined by statute as perpetual. I don't see a bankruptcy court overturning a congressional statute.

Edited by CynicalScouter

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I wanted to post this separately, because I think the idea of a liquidated National that no longer exists is about 0% likely. A crippled, hobbled, penniless shell? Yes. Total liquidation? No. And it is the congressional charter that may save it.

The Charter is currently codified as 36 U.S. Code Chapter 309 https://www.law.cornell.edu/uscode/text/36/subtitle-II/part-B/chapter-309

It grants Boy Scouts of America perpetual existence. It provides the Executive Board of the Boy Scouts of America exclusive power to "use emblems, badges, descriptive or designating marks, and words or phrases the corporation adopts."

The only recorded instances of congressionally chartered entities dissolving is where the entity's membership reaches zero. For example, when the last World War I veteran dies, so does Veterans of World War I of the United States of America, Incorporated

The same happened with the Grand Army of the Republic.

The odds that a bankruptcy court judge is going to order the dissolution of an entity that Congress has declared to be perpetual is about zero.

Edited by CynicalScouter

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I tend to agree that National will somehow get through reorganization and continue to own the IP.  If there were some legal theory that would force liquidation, I think there are some pro-BSA people who would buy it anyway -- just like some of the bases.  However, the center of the movement is going to shift back to the surviving councils.  We have not discussed it much, but I think a good number of councils will enter some form of bankruptcy.  Principal factors will include the number of credible claims attached to a council's geographic territory and how well the finances are.  It will probably speed the process of consolidations.  The poorly-run small councils in the hypothetical come to mind.

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10 minutes ago, Cburkhardt said:

We have not discussed it much, but I think a good number of councils will enter some form of bankruptcy.

Totally agree, but think this should be in the council relations section? I'll start a thread there, because I agree it should be discussed.

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You are right.  It really needs a new thread that is separate and apart from the national bankruptcy thread.  Different issue and different impacts.

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On 9/14/2020 at 3:33 PM, CynicalScouter said:

I wanted to post this separately, because I think the idea of a liquidated National that no longer exists is about 0% likely. A crippled, hobbled, penniless shell? Yes. Total liquidation? No. And it is the congressional charter that may save it.

The Charter is currently codified as 36 U.S. Code Chapter 309 https://www.law.cornell.edu/uscode/text/36/subtitle-II/part-B/chapter-309

It grants Boy Scouts of America perpetual existence. It provides the Executive Board of the Boy Scouts of America exclusive power to "use emblems, badges, descriptive or designating marks, and words or phrases the corporation adopts."

The only recorded instances of congressionally chartered entities dissolving is where the entity's membership reaches zero. For example, when the last World War I veteran dies, so does Veterans of World War I of the United States of America, Incorporated

The same happened with the Grand Army of the Republic.

The odds that a bankruptcy court judge is going to order the dissolution of an entity that Congress has declared to be perpetual is about zero.

I would have to imagine an appeals court would overrule it anyways if they did.  I'm no legal scholar, but I cannot fathom a legal argument that bankruptcy reorganization could force the dissolution of the BSA if it is specifically codified as perpeptual.  You might liquidate all the BSA assets that are not otherwise protected by law, but somehow I think the BSA would still then own all the IP.

Edited by ParkMan
expanded the thought

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Real Life Numbers.   I had specific councils I am familiar with in mind when I constructed the hypothetical for this thread.  They are not located in the same geography (as was earlier suggested), but reflect the character and operational circumstances of the fictional councils.  I purposefully chose councils without large LDS membership to control for the LDS departure factor.  Membership and financial figures I just reviewed show that in a year-to-year comparison at the end of August, my proxy councils performed as follows:

"Big City" council (metro sized):     Lost 10.4% of its overall membership, including about 12% each for Cubs and Scouts.  Finances still strong.  Operating surplus.

"Rich Folks" council (high-income area, small sized):     Lost 28.4% of its overall membership, including 33% of Cubs and 16.5% of Scouts.  Finances are good with a good operating surplus.

"Sad" council (mid-sized suburban/rural, history of bad management and known for internal disputes):  Lost 19.7 overall, including 21.3% Cubs and 15.6% Scouts.  Finances now catastrophic, including massive and non-sustainable operating deficit.  Huge mortgages on worn-out current facilities.

"Merger of Equals council" (rural, can't decide what to do):  Lost 27.9% of membership-, including 31.8% Cubs and 18.8% Scouts.  Problematic finances with huge operating deficit.  Worn out properties.

"Happy" council (good management and volunteer corps, no camp, works well with its nearby metro council):  Lost 15.5% overall, including 15.5% Cubs, 10% Scouts.

This is a very artificial construct and the above results cannot be projected across the BSA generally.  However, let's at least look at the real-life performance of the actual councils (which I will not identify).  The results for "Big City" council are better than I expected and the results for "Sad" and "Merger of Equals" councils are far worse that what I had expected.  Sad council is an example of an unsustainable approach in a geography that can should be able to sustain a program.  It will parish in real life because it is, well, imploding.  I am not sure there is anything that can be done to save it -- probably liquidation through removal of charter or even bankruptcy.  It's financial and property decisions are gong to bring it down and its program results are very troubling.  Merger of Equals council would have a chance, but its internally-divided volunteer leadership is not "owning the problem" at this point.  Still engaging in the blame game that will probably drive it into bankruptcy.  "Happy" council looks pretty good in light of COVID and everything else.  It's overall approach is proving to be effective.  "Rich Folks" council is performing just as I had expected.  They have the endowment and operating expertise to survive their "near-cratering" 28.4% overall membership loss.  You can rely on the management-types on that Board to root out the membership problems and at least hold things steady.  "Big City" has the staying power, endowment and finances to pull through.  In their case, scale and willingness to make difficult decisions has worked so far. 

Even though this is only a snapshot in time of isolated councils, my take-away is that the historic and crises-management issues well-discussed on this site are playing out at this pre-settlement phase.    My interpretation of the comments across the entire site is that there is a rough consensus that a downsized form of National (in terms of size and function) will be able to reorganize.  If that is true, National will have a role in funneling what will happen to these example councils.  Those who favor an expedited approach might hope that charters are withdrawn and new geographies are negotiated.  Those who favor a Darwinistic approach might just let a suffering movement "work it all out" at the micro level through years of bankruptcies, lawsuits and internal disputes.  What say you?

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10 hours ago, Cburkhardt said:

"Sad" council (mid-sized suburban/rural, history of bad management and known for internal disputes):  Lost 19.7 overall, including 21.3% Cubs and 15.6% Scouts.  Finances now catastrophic, including massive and non-sustainable operating deficit.  Huge mortgages on worn-out current facilities.

I guess we are the "Sad" council 😰😥😱

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