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Chapter 11 announced - Part 3 - BSA's Toggle Plan


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It's time for everyone's favorite game: let's kick the can further down the road.

The judge will NOT be hearing discussion on April 29 on TCC/FCR's motion to end BSA's exclusive period and allow TCC/FCR (or anyone else I guess) to file a counter to BSA's reorg plan 2.0.

That means the earliest we could even see a discussion about an alternate reorg plan is late May.

Now, what I hope is that this April 29 hearing was cancelled/can kicked down the road to May because TCC/FCR is about to come out with their own reorg plan.

Why do I think this? Based on three things

1) TCC has already laid out the rough outlines of its reorg plan when it filed its objections to BSA's motion to extend the exclusivity period. That outline = $102 billion. https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/884771_2506.pdf

2) Their absolute scorching objection to the $650 million Hartford sweetheart deal BSA made alluded to a plan in the works. Even if they cannot officially file the plan as an alternative, I bet they CAN file a draft copy as an attachment to the next pleading. https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/887735_2672.pdf

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36. Enough. The time has come for a different approach. The Coalition, the FCR, and the TCC are discussing a plan that they would propose to save the Boy Scouts, provide meaningful compensation to survivors, and provide an opportunity for Local Councils and Chartered Organizations to make contributions and become Protected Parties. Help is on the way, but for a competing plan—which would be proposed and supported by the survivor community—to be filed, exclusivity must be terminated. This needs to happen immediately.

3) The discovery demands TCC just filed against BSA, Century, and Hartford. That is an aggressive posture.

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Forums work well in many ways, but it is probably not the best way to discuss the difficult feelings of this bankruptcy while also discussing the impact to child sex abuse survivors.  However, there a

The mental fallout from my abuse was mostly dormant prior to the current lawsuit. It would still torment me in idle moments. Or at night sometimes when I lay in bed trying not to blame myself after so

I would like to not lock the thread but we seem to be in a rut that we need to get out of before any progress can be made. Here are some observations that might help. First, human dignity is the

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7 minutes ago, Eagle1970 said:

If the BSA was aware of abuse and didn't put insurers on notice in a timely manner, there may be coverage implications.  That would be a significant reason to reach a settlement.

Prior to the bankruptcy, this is exactly what happened. BSA asked insurers to cover certain prior lawsuits involving abuse. The insurers told BSA to stuff it and that the policies were void because BSA wasn't forthcoming. BSA sued in state court in Texas to force the payments.

https://www.insurancebusinessmag.com/us/news/breaking-news/boy-scouts-of-america-battle-insurers-over-coverage-for-sex-abuse-scandal-119599.aspx

That suit got stayed/paused as part of the bankruptcy.
 

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The Hartford Accident and Indemnity Co. and First State Insurance Co. in Texas have both turned their back on the BSA, arguing that the “ineligible volunteer files” show the organization hasn’t done enough to protect children against sexual abuse and misconduct, and hasn’t done enough to warn parents of the risks.

Both insurers are arguing in court that they shouldn’t have to pay claims related to abuse that the BSA could have reasonably prevented. The BSA and several councils sued both insurers for $13.5 million in June. In a separate legal battle, insurers are refusing to cover sex-abuse settlements and legal defense fees for the BSA, arguing that the events were not accidents and could have been prevented.

 

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TCC making more discovery demands.

The first set was to BSA, Century, and Hartford "in Connection with Estimation Proceedings" I discussed here

The second set went out Sunday night and appears targeted at BSA only regarding BSA's Plan Solicitation Procedures. As I said, looks like negotiations are just completely over at this point.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/27dce467-73db-44d2-a382-bbb5bc619d87_2695.pdf
 

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(i) The Official Committee of Tort Claimants to Boy Scouts of America and Delaware BSA, LLC, and the Future Claims Representative’s First Set of Interrogatories to Boy Scouts of America and Delaware BSA, LLC, Regarding the Debtors’ Plan Solicitation Procedures Motion and Related Matters;

(ii) Coalition of Abused Scouts for Justice, the Official Committee of Tort Claimants to Boy Scouts of America and Delaware BSA, LLC and the Future Claims Representative’s First Set of Requests for the Production of Documents to Boy Scouts of America and Delaware BSA, LLC, Regarding the Debtors’ Plan Solicitation Procedures Motion and Related Matters; and

(iii) Coalition of Abused Scouts for Justice, the Official Committee of Tort Claimants to Boy Scouts of America and Delaware BSA, LLC, and the Future Claims Representative’s First Set of Requests for Admission to Boy Scouts of America and Delaware BSA, LLC, Regarding the Debtors’ Plan Solicitation Procedures Motion and Related Matters

 

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On 4/25/2021 at 10:17 PM, TAHAWK said:

So what evidence is there that the BSA's polcies for the periods on question were "open-ended"?

Most of the General Liability policies I saw in the late 70's and 80's did not have any aggregate limit.  IIRC, the Aggregates and the Claims Made policies were subsequent to that period, but certainly correct me if the dates are off.  In any event, the evidence would be that the typical policy in the 70's did not limit the number of occurrences.  There were also few exclusions back then, again IIRC, for sexual abuse.  

 

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2 minutes ago, Eagle1970 said:

My greater concern is that if this is litigated, coverage could be stripped because of failure to give timely notice of claims or failure to mitigate circumstances leading to the claims.

That's been the insurance companies position all along:

1) BSA withheld information when they entered into the policies, voiding them

2) BSA withheld information during the duration of the policies, voiding them

3) Insurance does not cover the criminal actions of the insured, and what BSA and its leaders did was criminal.

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20 minutes ago, CynicalScouter said:

That's been the insurance companies position all along:

1) BSA withheld information when they entered into the policies, voiding them

2) BSA withheld information during the duration of the policies, voiding them

3) Insurance does not cover the criminal actions of the insured, and what BSA and its leaders did was criminal.

Similar battles are going on in other cases.  Found this article to be interesting ... and perhaps a hint to future battles.

https://buffalonews.com/news/local/buffalo-diocese-relies-on-insurance-policies-to-cover-abuse-claims-in-bankruptcy/article_aadfdb85-b90c-548d-9e36-9be79e19f1b5.html

 

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Among the points of contention will be how “occurrences” of abuse get quantified and to what extent diocese officials knew about abuse and allowed it to happen. Insurers in past cases have sought to group allegations of abuse into a single occurrence, regardless of the number of victims or perpetrators, thus limiting the amount they would need to pay out. And Continental's lawyers already have accused the Buffalo Diocese of creating "a system of protecting, transferring, and obscuring the identities of pedophilic priests” that would invalidate insurance coverage.

 

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On 4/21/2021 at 6:04 PM, CynicalScouter said:

[responding to @Eagle1993]

2) I think the idea with the new toggle plan is to [leave] the legal status of the LCs alone, estimate abuse claims based on a point system. That just leaves the question of the HA bases.

So people have been saying here that it might help move the case along if the Judge would rule on the legal status of the LCs. Still no stand-alone ruling on that question, but she did rule on the "Second Omnibus Objection" yesterday.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/825ce427-3f9f-4885-9a5e-469008f3d965_2686.pdf

The following claims appear among those on the first page of Schedule 1 (page 5 of the PDF):

  • Accounting Principals, Jacksonville, FL. Claim #2. $8000. ""Claim asserts amounts owed by Local Council Occoneechee Council, which is not a Debtor in these Chapter 11 cases."
  • Albany Auto Service, Albany, GA. Claim #123. $913. "Claim asserts amounts owed by Local Council South Georgia Council, which is not a Debtor in these Chapter 11 cases."
  • Ball Chain Mfg Co, Mount Vernon, NY. Claim #110. $889. "Claim asserts amounts owed by Local Council Hudson Valley Council, which is not a Debtor in these Chapter 11 cases."
  • Fort Bend County, Houston, TX. Claim #5. $45. "According to the Debtor's books and records, Debtors have no liability on the asserted claim. The Debtors believe that liability, if any, belongs to Western Los Angeles County Council, which is a non-Debtor third party."

 

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34 minutes ago, DavidLeeLambert said:

So people have been saying here that it might help move the case along if the Judge would rule on the legal status of the LCs. Still no stand-alone ruling on that question, but she did rule on the "Second Omnibus Objection" yesterday.

I'm thinking incidental claims between $45 and $8000 will have little bearing on the substantive discussion, precedent (express or implied) or court's ruling on 84,000 individual abuse claims valued at not less than between $2,450,000 and $50,000. Just my guess.

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Just now, ThenNow said:

I'm thinking incidental claims between $45 and $8000 will have little bearing on the substantive discussion, precedent (express or implied) or court's ruling on 84,000 individual abuse claims valued at not less than between $2,450,000 and $50,000. Just my guess.

I also wonder if this "non-Debtor third party" is directional.

In other words, the abuse claims are against National and, separately, the Councils.

Let's use an example from the above: Albany Auto Service

The claim was that the LOCAL COUNCIL owned camp truck needed to be serviced. Why this person then filed against NATIONAL isn't clear, but the debt would be the LCs and have to be paid by LC assets.

But that is not the issue in the abuse cases. The issue here is whether a claim against NATIONAL AND THE LC (jointly AND separately) can be paid for out of LC assets and whether, for these purposes, LC assets can be used to satisfy NATIONAL debts/abuse claims.

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Lawrence S. Robbins Added as a lawyer for the coalition of abused scouts.  Apparently he has Kosnoff’s approval.
 

He has argued 18 cases in the Supreme Court and testified as a witness in major cases - as recently as Trump’s Impeachment (he was Mary Yovankavitch’s legal counsel).  
 

The discovery requests followed by adding a big legal gun makes me wonder where this is headed. BSA’s negotiation with Hartford appears to have blown up in their face.  National needs to figure how to get out of this mess... the current counsel seems to be failing.

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Looks like multiple lawyers added as part of a lawfirm.

Also add to the mix one Ariel N. Lavinbuk. Focus on bankruptcy, breach of contract and fraudulent transfer law.  He writes for Slate, Harvard and Yale Law Review.  

Also added is Ariel N. Lavinbu.  He is another Supreme Court litigator who has the highlight of winning a $4.6B lawsuit against the Country of Argentina.

Is it normal to see major lawyer changes this deep into bankruptcy hearings?  I’m curious what the thoughts are from our lawyers in the forum seeing the discovery requests followed by an addition of a fairly major law firm.

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9 hours ago, Eagle1993 said:

Is it normal to see major lawyer changes this deep into bankruptcy hearings?  I’m curious what the thoughts are from our lawyers in the forum seeing the discovery requests followed by an addition of a fairly major law firm.

I’d call it a litigation pivot. Different team for a different strategy, as well as a signal of the level of seriousness. Free agent acquisitions and substitutions mid-season recognizing you have a chance to win or lose the title based on key talent. 

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9 hours ago, Eagle1993 said:

Is it normal to see major lawyer changes this deep into bankruptcy hearings?  I’m curious what the thoughts are from our lawyers in the forum seeing the discovery requests followed by an addition of a fairly major law firm.

People tend to think of all lawyers as sharks looking for blood/money. They aren't. Most lawyers I know and have worked with for decades just want to push to get something that approximates justice with the minimum amount of effort (in terms of time and treasure wasted).

If that means mediation, great.

If that means negotiation, great.

If that means litigation in a courtroom, that's something of a "failure." At that point you want fighters, not negotiators.

As much as I respect the TCC lawyers, they are to my way of thinking negotiators.

The lawyers the Coalition just brought in are fighters. They are are here to win and they are being paid the big bucks to do so.

This just sends a clear/clearer message that negotiations are over, as if the response they filed or the multiple discovery demands didn't get that message across,

I would not be shocked to see the Coalition formally withdraw from mediation; they could stick around just pro forma but not really engage.

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