Chapter 11 Announced - Part 4 Revised Plan

[ThenNow 1373]

https://www.claimsjournal.com/news/national/2021/08/16/305433.htm

[Eagle1993 2160]

12 minutes ago, ThenNow said:

https://www.claimsjournal.com/news/national/2021/08/16/305433.htm

Really good article; however, they completely missed the US Trustee’s objection.  

[ThenNow 1373]

16 minutes ago, Eagle1993 said:

Really good article; however, they completely missed the US Trustee’s objection.  

As to the RSA or the Coalition fees? He pretty much went dead last (second from last) and the reporters were apparently on deadline. His statements need to be reported somewhere, I think. They were pithy and potent and powerful. 

[CynicalScouter 1434]

So, certain insurers have filed additional objections to the BSA reorg plan.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/67f31395-b829-4082-9f00-d457ab2b72f3_6052.pdf

And they keep coming back to a point about 2/3rds votes but they also note the second part of the criteria:

Quote

Pursuant to section 1126(c) of the Bankruptcy Code, a class of claims can only accept a plan “if such plan has been accepted by creditors . . . that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors . . . that have accepted or rejected such plan.” 11 U.S.C. § 1126(c) (emphasis added).

This may become important later for the following reason.

Right now, the BSA plan calls for all 82,500 claimants to each be given $1 in value to vote. That means ALL 82,500 claimants have an equal say in this process.

What the insurers have said, and what the Zalkin and other abuse claimants have said, is this is grossly unfair. Let me explain in another context.

XYZ corp files for bankruptcy. There are 100 claims valued at $1 million, BUT of that amount 67% (670,000) belongs to John Doe. The other 99 claims are all equally divided ($330,000/99 = $3,333).

Scenario 1: John Doe votes his 1 vote in favor of the plan. The 99 vote against. The plan fails 1-99. This ensures that the little claims don't get crushed by the 1 big claim.

Scenario 2: John Doe votes his 1 vote AGAINST the plan. The 99 vote in favor. The plan fails NOT for lack of a 2/3rds of claims (it is approved 99-1) but a failure to get 50%+ of the VALUE ($330,000 of value in favor, $670,000 in value against). This ensure that the big claim doesn't get "swamped" or "washed out" by the little claims.

The insurers and several victims lawyers are worried this going to become a Scenario 2: that 2/3rds of claimants (specifically 83%) who may represent due to statutes of limitations a TINY FRACTION of the value of claims are about to swamp the smaller percentage of claimants with big value claims that they can take into state courts in select states now and (they think) win on. Or, as they put it.

Quote

As discussed above, 83% of the 82,500 unique and timely Abuse Claims are “presumptively barred.” Nevertheless, each presumptively barred claim would be assigned a value of $1.00 for voting purposes and carry the same weight as each valid and enforceable Abuse Claims, thereby creating the possibility that the Plan could be confirmed over the votes of the holders of the 14,000 Abuse Claims that are more likely to have a legitimate economic stake in the outcome of these Chapter 11 Cases.

 

Edited August 17, 2021 by CynicalScouter

[elitts 464]

3 hours ago, ThenNow said:

Yeah. We’ve discussed this at great length before and I know it’s of little value to whip it some more. I will anyway. I have lots more coffee to drink, nothing much to do just yet and because the impact of that statement has loomed over the entire process. 

I can speak for myself (at least most days) and say the “equitably compensate survivors of abuse in Scouting” message was a huge banner of acknowledgment and hope. It certainly enhanced my desire to file a claim. Did I do any math? Not much. I guessed at potential claims and came up with between 5000 and 10-12,000 on the high end. Knowing a bit about the National asset base, that of my LC, and the deep and wide insurance coverage, I figured that would result in a meaningful award for all of us. Regardless the number of claims, they never should have used the word “equitable” — nor compensate in my book but that’s semantics — or implied that all survivors would get such compensation. It was a horrible unforced error and I can’t believe it wasn’t better thought out. Well, after hearing you guys talk about governance, I can.

I have a comment and a question.

You are an attorney, and as such, arguably, are in the top few percent of the US public when it comes to education and critical thinking skills.  You are also well versed in the nuance of language and the importance of using exactly the right terminology when making statements. Thus, when you read the words "equitably compensate", it has a fairly specific meaning to you.

That said, do you really think most of the victims out there would really have distinguished between a statement that the BSA wanted to "Equitably compensate victims" and one where they simply said they wanted to "compensate victims"?  Given the public's average (5th grade) reading comprehension level, was there really any reasonable way they could have phrased it that wouldn't have led to basically the same disappointment we are seeing now?  After all, for most people the only exposure they have to either jury awards or settlements is going to be from either fictional TV or the news and neither one spends much time talking about all the settlements that happen in the <$20,000 range, 

 

I mean, I send out a tax assessment notice each year to taxpayers that says in bold , red, 28pt font at the top of the page. 

THIS IS NOT A TAX BILL

and even then I get a dozen phone calls every year upset about the new tax bill they just got.

[CynicalScouter 1434]

8 minutes ago, elitts said:

I mean, I send out a tax assessment notice each year to taxpayers that says in bold , red, 28pt font at the top of the page. 

THIS IS NOT A TAX BILL

and even then I get a dozen phone calls every year upset about the new tax bill they just got.

 

I think the broader point is that while there's always going to be a percentage of people who are just not able to process the message, that in this instance it was an absurdly large percentage. And I think this is in part two-fold.

1) The reports out about sexual abuse claims that got paid out in the hundreds of thousands if not millions BUT in small-number-of-victim cases. I've read in some of the victim letters to the court victims saying, in effect, "Why is BSA offering only $6,000? There is a camp near me that is valued at $1 million. Give me that $1 million." It is hard for people to grapple with the idea that with so many claimants, the amounts are going to be diluted. They are thinking sexual abuse victim numbers, when really this is mass tort ($10 coupon for a bottle of hand lotion; $50 toward the purchase of a new hard drive) numbers. That takes so much nuance that unless you literally show the math, ($850,000,000/82,500  = $10,303). People won't get it and even if you showed the math many wouldn't. They don't view themselves as part of a "mass tort" case. They view it as "I was hurt. I was abused. What about my case? What is fair is a lot more than that."

2) The misunderstanding of how much BSA has to offer. I would bet if you asked many victims they'd grossly over-estimate exactly how much BSA has to offer here and expect there to be billions. As noted, BSA has, at best, $1-1.4 billion in total assets (that's BEFORE taking out liabilities). They just assume BSA is sitting on this big pile of money that they can just start handing it out. And some of that was driven by misunderstandings that was deliberately drummed up by some of these mass tort legal advertising with talk about how a $1.5 billion fund had already been agreed to, how all claims would be confidential, etc.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/842040_1145.pdf

The judge had to eventually issue an order to stop those kinds of ads, but it was too late.

[ThenNow 1373]

FYI. Shared with permission.

https://pszjlaw.zoom.us/rec/share/JfKB6sEqkyXxp3zIc4oEvcSC8TXsZEYrMmJOSCA_F1jFTFNeUBjfJDVW_z-kIjEp.ND9BCyD1lDjnFBzn

[CynicalScouter 1434]

27 minutes ago, ThenNow said:

FYI. Shared with permission.

https://pszjlaw.zoom.us/rec/share/JfKB6sEqkyXxp3zIc4oEvcSC8TXsZEYrMmJOSCA_F1jFTFNeUBjfJDVW_z-kIjEp.ND9BCyD1lDjnFBzn

Kennedy at 9:52 said "We know that there are cynical people out there...we know that there are volunteer scouters out there, we read the forums..."

Hi Dr. Kennedy!

Edited August 17, 2021 by CynicalScouter

[ThenNow 1373]

1 hour ago, elitts said:

You are an attorney, and as such, arguably, are in the top few percent of the US public when it comes to education and critical thinking skills.  You are also well versed in the nuance of language and the importance of using exactly the right terminology when making statements. Thus, when you read the words "equitably compensate", it has a fairly specific meaning to you.

Yup, I am. Education and critical thinking? I'll let you decide on that one.  I suppose that is correct.

1 hour ago, elitts said:

That said, do you really think most of the victims out there would really have distinguished between a statement that the BSA wanted to "Equitably compensate victims" and one where they simply said they wanted to "compensate victims"? 

I do. I've spoken with at least 10 people about this language, from my mom (HS education), my brother (two masters, one in ESL), lawyer friends, an auto tech, former factory worker and others, most of which admittedly have a college and/or university degree. 

You're making one big assumption in your question and it is counter-opposed to your compliment that I am dogged about precision of language. (My spelling stinks, however.) Here it is. You didn't ask me what words I would have advised them to use instead of what they did. You fed me words. I see Mosby's very first public statement as a serious mistake that has lead to all manner of confusion, anger and heartache. This is what he said:

“While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process – with the proposed Trust structure – will provide equitable compensation to all victims..."

See the difference? "Will provide." An absolute, not qualified with "do our best," or "work diligently" or anything else. Big mistake. "Equitable," which many, many people know means, essentially, "fair." "Compensate." This is a nit I've picked, but poor choice. And, this one is ginormous. "ALL." I don't really have to say how crazy it was to say that. Where were the bloody attorneys and PR wordsmiths? Seriously. 

1 hour ago, elitts said:

I mean, I send out a tax assessment notice each year to taxpayers that says in bold , red, 28pt font at the top of the page. 

THIS IS NOT A TAX BILL

and even then I get a dozen phone calls every year upset about the new tax bill they just got.

Totally apples to oranges. Almost EVERYONE panics when they think something is a tax bill and wants assurance it's not. That's not a matter of education. Being promised money after waiting 50 years? Waaaay waaaay waaaay different.

Edited August 17, 2021 by ThenNow

[Eagle1993 2160]

5 minutes ago, CynicalScouter said:

Kennedy at 9:52 said "We know that there are cynical people out there...we know that there are volunteer scouters out there, we read the forums..."

Hi Dr. Kennedy!

Ha!  I will say that I'm in a few FB groups and occasionally check out Reddit.  I don't know about ScoutsL but this forum and this topic seems to be the one that provides the most info from the bankruptcy case and has a good combination of claimants and current scouters providing their thoughts.  At times it gets a bit nasty (moderators try to limit that) and drifts off topic, but overall it probably provides a good snapshot of the thoughts of the engaged members of various groups.  We already have decent evidence that Kosnoff reads this forum/topic from time to time and we know, based on history, that senior members of National BSA are aware of this forum.  It is probably good news that a member of the TCC is reading this (if he is). 

Looking through all of the objections and comments from the last 3 days of trial, I really do hope the judge

• rejects the Hartford deal (what is the point of keeping it if it seems very apparent it will be rejected by the claimants)
• approves the Collation payments (it is $10M+ ... yes, a lot of money, but in $850M is in discussion right now and rejecting it could stop the process and have BSA wasted many times that amount in getting to a new RSA)
• approves the RSA ... I'm not sure why the board didn't vote for it, but it is not like the BSA has another great plan up its sleeves.  This saves the 4 HA bases, trademarks and overall organization.  I'm not sure they can do better.

If the judge goes the other direction, I'm concerned that the deal will be worse for both BSA & claimants.  Insurance companies can fight later on in court ... there is no need to delay this deal.

 

[ThenNow 1373]

4 minutes ago, Eagle1993 said:

approves the Collation payments (it is $10M+ ... yes, a lot of money, but in $850M is in discussion right now and rejecting it could stop the process and have BSA wasted many times that amount in getting to a new RSA)

As Mr. B said, they can apply later, once we know what was actually done and accomplished. That is, after all, the norm. Pay for votes is what it was. Desperation breeds concession and surrender, I suppose. I agree, it's a small number, but it's disgusting, especially in light testimony from Whitman (Alvarez & Marsal) and Desai, and the statements by the executives. At least make them vet the numbers, for Pete's sake.

[Eagle1993 2160]

1 minute ago, ThenNow said:

As Mr. B said, they can apply later, once we know what was actually done and accomplished. That is, after all, the norm. Pay for votes is what it was. Desperation breeds concession and surrender, I suppose. I agree, it's a small number, but it's disgusting, especially in light testimony from Whitman (Alvarez & Marsal) and Desai, and the statements by the executives. At least make them vet the numbers, for Pete's sake.

This is a fair point and it doesn't feel right.  If I knew the Disclosure would proceed on schedule without this payment, I would be 100% in favor of rejecting it.  Perhaps it will as the Coalition lawyers (I believe many if not all would be paid through the contingency fees) would look pretty dirty if they scuttled the RSA because they personally were not being paid directly out of BSA fees.  

[ThenNow 1373]

8 minutes ago, Eagle1993 said:

Perhaps it will as the Coalition lawyers (I believe many if not all would be paid through the contingency fees) would look pretty dirty if they scuttled the RSA because they personally were not being paid directly out of BSA fees.  

Yupper.

[CynicalScouter 1434]

The Ad Hoc Committees for Roman Catholic Dioceses and the Methodist Churches filed their joint objections to the BSA plans.

Despite happy talk from the United Methodist FB group about how Methodists remain committed to the BSA, the filing says quite the opposite.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/e118c88c-cfc9-48f8-9cd6-5e3967d21d9f_6067.pdf

The Proposed Plan is not Feasible Because it Incentivizes Chartered Organizations to Abandon Scouting
 

Quote

68. The Debtors’ financial projections assume they will be able to hold on to around one million members going forward. (DS, Ex. E.) Currently, Catholic and Methodist Chartered Organizations contribute approximately a third of the Debtors’ remaining membership, and as expressed above and in prior filings, those organizations have serious concerns about their proposed treatment under the Plan.

69. The Debtors cannot execute their business plan without the continued support of Chartered Organizations, and yet the proposed impairment of Chartered Organizations’ rights jeopardizes that support. If a sufficient number of Chartered Organizations terminate their relationships with the Debtors, then it is unlikely the Debtors will be able to meet their financial obligations under the proposed Plan. See In re Paragon Offshore PLC, 2016 WL 6699318, at *29 (denying confirmation where the debtor’s financial projections were not reasonably achievable).

 

Edited August 17, 2021 by CynicalScouter

[yknot 1338]

1 hour ago, CynicalScouter said:

The Ad Hoc Committees for Roman Catholic Dioceses and the Methodist Churches filed their joint objections to the BSA plans.

Despite happy talk from the United Methodist FB group about how Methodists remain committed to the BSA, the filing says quite the opposite.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/e118c88c-cfc9-48f8-9cd6-5e3967d21d9f_6067.pdf

The Proposed Plan is not Feasible Because it Incentivizes Chartered Organizations to Abandon Scouting
 

 

Two thoughts. It sounds like common horsesense, which has often been lacking. It also sounds a teensy bit like a threat. It's one thing if COs don't want to sign the traditional CO agreement. While it's yet to be worked out how councils would be able to handle that responsibility en masse, it still keeps traditional relationships in place to some degree.  It's another thing if the relationship turns chilly or even hostile and a facility use agreement might be problematic. The difficulty for these COs is that many have only dealt with their local unit or maybe council level, which often operates based on warm personal relationships at the unit level and somewhat sensibly at the council level. They are just now being exposed to how national operates and it must be eye opening, especially for some of the intra denominational factions that have been so supportive so far. That might change.