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Chapter 11 Announced - Part 4 Revised Plan


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@CynicalScouter Thanks from me and frankly, surely everyone, for tracking on the status of National's bankruptcy pleadings, and the procedural steps, past and pending, in the Bankruptcy case. And your

Okay. Enough. If you aren't talking about court proceedings then drop it.  It would be a shame to lock this thread now.

A few random observations from watching this bankruptcy unfold over the past several months: The focus has clearly been on protecting the national organization first and then the local councils.

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1 hour ago, DavidLeeLambert said:

So Thursday July 22nd was the deadline to object to the Restructuring Support Agreement ... ... ... ... ... ... 

 

1 hour ago, CynicalScouter said:

...  If I had to guess, I'd say that the RSA plan is done for. Every major group INCLUDING and perhaps most critically the US Trustee has come out against it.  ...

Thank you for the extremely helpful summaries. 

I've always wondered about these issues.   Insurance prejudicial.  No significant relief.  Duplicative services.  Conflicts of interest.  Are we getting to where LCs will need to find a path to continue scouting for years or even forever without BSA?  

1 hour ago, CynicalScouter said:

... should not renew charters past December 31, 2021.

I'm surprised this is not a new standard.

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2 hours ago, CynicalScouter said:

One more point: the Methodist Scouting groups are both saying a) local Methodist bishops should NOT end the CO relationships but b) they should not renew charters past December 31, 2021.

https://www.facebook.com/MethodistScouting/posts/579407730131725

It is an absolute mess.

It's worded a little differently in my state -- should not charter/recharter prior to December 31, 2021 -- but I guess the meaning is essentially the same...? 

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19 hours ago, CynicalScouter said:

7) The US Trustee has come out against the RSA. I'll review that in a separate post. https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/8eb26aec-4928-412c-836f-57ec9157c343_5685.pdf

As promised. Just as a refresher: the US Trustee is a Department of Justice appointee in each Bankruptcy Court Region (Delaware, New Jersey, and Pennsylvania in this case) who "monitors the conduct of bankruptcy parties and private estate trustees, oversees related administrative functions, and acts to ensure compliance with applicable laws and procedures." It was the Trustee who appointed the members of the TCC.

Before people worry is a Trump thing or a Biden thing, I'll repeat what I said in May

Now that that is out of the way, Vara (or rather lawyers working for him) basically took BSA AND the Coalition AND the TCC to the woodshed here. You may recall that the last time we heard from the Trustee he expressed major concerns that this entire plan to direct 82,500 claims into a mass settlement via bankruptcy THAT ALSO covered third parties (such as LCs and COs) was likely illegal.

Welp, the Trustee's views have gotten even dimmer of this whole plan and in particular the RSA and it is now targeting what it sees as inappropriate conduct by both BSA and the Coalition.

In short, there is no statute whatsoever that authorizes any of this stuff, especially the plan for the Coalition to get paid (in effect) before anyone else.

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Supreme Court precedent requires express statutory authority to provide a priority payment ahead of other creditors in bankruptcy and there is no such authority here. As a result, the RSA Motion should be denied.

 

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Just spotted this:

STATEMENT OF THE AD HOC COMMITTEE OF LOCAL COUNCILS IN SUPPORT OF THE RSA APPROVAL MOTION 

Document 5756, filed 7-26-21, page 3:

"As of the date of filing of this Statement, virtually all Local Councils have returned letters of intent agreeing to pay amounts that, in the aggregate, will meet the amounts required under the RSA. Additionally, the Ad Hoc Committee is confident that, by the time of the hearing on the disclosure statement, it will have secured letters of intent from all Local Councils to contribute the amount requested of them by the Ad Hoc Committee. 

As required under the RSA,6 the amount of each Local Council’s contribution – and its breakdown of cash and property – will be included in the disclosure statement."

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5 minutes ago, SiouxRanger said:

As required under the RSA,6 the amount of each Local Council’s contribution – and its breakdown of cash and property – will be included in the disclosure statement."

This is the doc link https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/327b25bb-1d4e-4db6-a901-0b542f32f572_5756.pdf

Yep. No breakdowns on how much each Council will contribute until the last minute.

But a lot of time is spent trying desperately to insist the COs are not being thrown under the bus (see pages 4-5).

Meanwhile, the COs themselves are running for the hills and/or switching to facilities-only agreements.

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1 hour ago, CynicalScouter said:

In short, there is no statute whatsoever that authorizes any of this stuff, especially the plan for the Coalition to get paid (in effect) before anyone else.

Great summary statement.  So fundamental.  

I swear this smells very much like a person I knew from years ago.  His profit was tied to delays and difficulty.  A certain percent of companies gave up chasing small amounts they had a right to just because of delays or cost chasing the funds.  It was tens of thousands at a time.  It was unethical to me, but it was just business to him.  

It smells like this case.  Way too many open questions, but rushing to a settlement that might not be legal.  It feels like people want to get funds distributed even though it might later be found not legal or conveying protection.  BUT then try to get those funds back to pay the correct rightful order of debtors.  It feels like it would quickly be too late to pull funds back as the funds would be covering costs to execute the legal case.   

It smells like a quick push to accept a settlement because there are long questions whether it's legal that could take a much longer time.  People want to pull some funds out.  

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16 minutes ago, fred8033 said:

It smells like a quick push to accept a settlement because there are long questions whether it's legal that could take a much longer time.

It is also, I truly believe, true that BSA will eventually exsanguinate and bleed out all its cash, resulting in a Chapter 7 by default if this doesn't end some point soon.

BSA wants out, ASAP. If later down the road the insurance companies, the COs, the US Trustee, and others are right and this gets overturned on appeal, BSA still has its bankruptcy discharge and will be out from under whatever happens at that point.

Edited by CynicalScouter
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3 minutes ago, CynicalScouter said:

It is also, I truly believe, true that BSA will eventually exsanguinate and bleed out all its cash, resulting in a Chapter 7 by default if this doesn't end some point soon.

BSA wants out, ASAP. If later down the road the insurance companies, the COs, the US Trustee, and others are right and this gets overturned on appeal, BSA still has its bankruptcy discharge and will be out from under whatever happens at that point.

Yep.  BSA is highly motivated.  BSA's good in bankruptcy is moving on ASAP.  

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The Decline and Fall of Soviet Empire: Forty Years That Shook The World ...
By Fred Coleman, p. 145.

"The Russians themselves never believed their country had an effective civil defense program against nuclear attack. I asked dozens of Soviet friends, and none of them said they had ever been drilled on either going to a shelter or evacuating the city. One Russian I knew well suggested this procedure: "After the nuclear attack warning sounds, wrap yourself in a sheet and walk slowly to the nearest cemetery. Why slowly? So was not to panic the others."

 

Now that the LC's are apparently "all in," time to look for a sheet.

And yet not a peep in my Council about the effect of National's bankruptcy.

Edited by elitts
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Just FYI it appears that the latest bone the insurance companies plan to pick, among others, with the RSA is the same one that the US Trustee and others have voiced:

Why on earth is the Coalition getting paid out for its legal fees now, ahead of everyone else including the victims? How does it rate such special treatment and, as the US Trustee pointed out, what statute authorizes this?

It is very, very much looking like the lawyers for the Coalition are getting a guaranteed payout now ahead of everyone else. The question is why and for what? The Insurance Companies seem to have a theory or two about that.

The latest is that now BSA is trying to "backfill" the justification for paying out the Coalition and releasing National Executive Board meeting minutes and discussions AFTER the depositions of Mosby and others. Now the insurance companies want Mosby, Whittman and others back into a deposition room to explain how this sweatheart Coalition deal got cut

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/50faea53-574a-427b-b767-9e7ff03e8926_5776.pdf

Edited by CynicalScouter
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Official notice for the July 29 hearing along with Zoom link. The judge has already indicated she expects this to take two days.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/2033f26f-54f7-4914-bb4f-ba262ed196ab_5786.pdf

As a reminder on the agenda (likely in this order)

The 2019 motion(s)

Century’s Motion to Compel Abused In Scouting, Kosnoff Law PLLC, and the Coalition to Submit the Disclosures Required by Federal Rule of Bankruptcy Procedure 2019 (D.I. 2030, Filed 2/3/21).

There's also a related motion which may be absorbed into the discussion on the above

Hartford Accident and Indemnity Company, First State Insurance Company and Twin City Fire Insurance Company’s Motion to Compel Abused in Scouting and Kosnoff Law PLLC to Submit Rule 2019 Disclosures (D.I. 2028, Filed 2/3/21).

This is the effort to definitively identify what the financial and legal relationships are of Kosnoff (personally), Abused in Scouting, his law firm, and the Coalition. Expect to see/hear a lot about who is financing the Coalition, how much control Kosnoff does/does not have, what the role of the Coalition is, what the role of Abused in Scouting is, and what authority AIS or the Coalition have to sign anything on behalf of anyone, etc.

This was Kosnoff's response by the way from last week. In short, he's claiming Abused in Scouting doesn't really exist, sorta: https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/522c3978-8f36-4dec-a7be-46d598e169f4_5679.pdf

The RSA

Debtors’ Motion for Entry of an Order, Pursuant to Sections 363(b) and 105(a) of the Bankruptcy Code, (I) Authorizing the Debtors to Enter Into and Perform Under the Restructuring Support Agreement, and (II) Granting Related Relief (D.I. 5466, filed 7/1/21).

The main item. At this point, this is where the knockdown drag out is going to be. So far, there are enough objections (Hartford, US Trustee, Insurance Companies in general, LDS, Catholic Dioceses, Methodists, etc.) to enough parts that I do not personally see how this ends approved by the end of this hearing on July 30. If the judge issues a ruling approving it at all, it is going to be after the hearing I would suspect.

What is NOT on the agenda (but will get brought up again and again anyway)

The Disclosure Statement/Voting and plan confirmation. Theoretically, July 29 is all about the RSA: the Plan to get a plan/settlement/something for victims to vote on. The hearing on the Disclosure Statement and voting is set for August 17 CONTINGENT on this RSA thing getting approved. If the RSA fails, then the August 17 hearing is either off or turns into a hearing on a revised RSA. Everything gets delayed another 30-60 days.

Confirmation would be later in the fall, see below. Even if 2/3rds of the voting victims approve the settlement, the judge at the confirmation hearing can still veto this whole thing. Conversely, even if LESS than 2/3rds of the voting victims reject the settlement, the judge can confirm it anyway ("cramdown"). Expect parties to try and kick some questions/cans down the road. The BSA and TCC/FCR/Coalition want to delay and postpone a lot of these questions until then. The insurance companies, some victims lawyers, lawyers for COs, and others want these questions answered NOW prior to voting.

Timetable

I posted here. In short, my estimate was (if everything works PERFECTLY as BSA wants it) late October before BSA is out of bankruptcy. I believe some law firms have notified their clients their estimate was early October.

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59 minutes ago, CynicalScouter said:

Official notice for the July 29 hearing along with Zoom link. The judge has already indicated she expects this to take two days.

Update:

AMENDED notice filed, there is a hearing taking place TODAY (July 27) to address issues related to mediation privilege.

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/c309500e-d945-4204-be88-d476f83cce8d_5788.pdf

Quote

DISCOVERY CONFERENCE
Status: Please take notice that at the direction of the Court, a discovery conference regarding discovery disputes, including the parties’ positions on mediation privilege, will be held today at 3:00 p.m.

For those of you who have been saying that BSA and LCs are not bound by mediation privilege and/or NDAs, this is going to be the hearing to watch.

Reading between the lines, I believe that BSA and the LCs have read the mediation and NDAs was restricting things and conversations that others are arguing are just fine. But we'll know details about what is being contested shortly.

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One more point: more and more victims are coming out against this RSA plan in filings with the court. I count at least 12 different filings representing hundreds of claims/victims (they are listed by claim number) objecting to the RSA plan.

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