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Bankruptcy, everything but the legalese


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A question for our legal team. There have been multiple local news reports of their councils financial contributions to the settlement. The articles are all similarly phrased with a finality tone as to the amount they will contribute.  I can appreciate the Debtor trying to push "a final offer" but  with Chapter 11 mediation ongoing is this permissible?

https://www.desmoinesregister.com/story/news/2021/09/17/boy-scouts-settlement-2021-mid-iowa-council-pay-victims-child-sex-abuse/8377326002/

https://www.spokesman.com/stories/2021/sep/16/inland-boy-scouts-council-contributes-to-national-/

 

Edited by RememberSchiff
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15 minutes ago, RememberSchiff said:

A question for our legal team. There have been multiple local news reports of their councils financial contributions to the settlement. The articles are all similarly phrased with a finality tone as to the amount they will contribute.  I can appreciate the Debtor trying to push "a final offer" but  with Chapter 11 mediation ongoing is this permissible?

https://www.desmoinesregister.com/story/news/2021/09/17/boy-scouts-settlement-2021-mid-iowa-council-pay-victims-child-sex-abuse/8377326002/

https://www.spokesman.com/stories/2021/sep/16/inland-boy-scouts-council-contributes-to-national-/

 

Sure is. No one says what the LCs are offering is what will be accepted. In addition several councils I know in their letters of intent to pay into the settlement specifically said it was conditioned on global settlement that includes them (obviously they are not paying if they are not covered).

So mediation is totally relevant and the fact that LCs are saying “we will pay X” is not the last word in the subject.

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On 9/16/2021 at 9:46 AM, johnsch322 said:

From Congressional testimony concerning USA Gymnastics, ... "From the very beginning when I was reporting my abuse to Steve Penny … from the very beginning, Steve Penny kept telling my mom and I that the most important thing was to keep things confidential. ...  Doesn't this also sound like the Boy Scouts?  

Yes and no.  The difference is when.  1970s/1980s/1990s yes.  Since 2000, I pray not. 

Time Frame --> Mandatory reporting & Enlightened understanding of CSA ...  Very different ... Time frame absolutely creates a big difference.  Most BSA cases (we are talking about) are BEFORE the nation well understood abuse and before scout leaders became legally required to report.  USA Gymnastics incidents are very recent.  Late 1990/2000s/2010s.   Well after CSA became understood.  USA Gymnastics leaders MUST have fallen within a mandatory reporter role.  Either they were responsible for running the medical program or they were educators or ???? ...  ... They must have been mandatory reporters.  

What really surprises me is why was the Nassar allowed to be alone with underage girls during an exam.   Why was a nurse not in there?  Why didn't someone say practices need to reflect modern standards?  If this was any clinic in my state, that would be the expected standard.  

5 hours ago, RememberSchiff said:

In part,  but my understanding a higher percentage of US Gymnast victims directly reported to law enforcement to no avail.

This also really surprised me.   The FBI (and others???) recieved the reports within the last 3 to 5 years.  Very recent.  ... These cases were reported after enlightenmentAfter laws being changedAfter law enforcement has been taught to take this seriously.   How did they fail !!!

In previous posts, I posted about large numbers of incidents excused away / minimized / labeled boys being boys, etc.  Gynastics.  Hockey.  etc.  ... If multiple groups are not taking these reports seriuosly now, imagine how police would have processed such reports from the 1970s / 1980s.  

I must admit that I am shocked by recent cases when they come up.  I always think we are more enlightened now.   ... maybe each group needs to go thru it's pain ...

 

 

Edited by fred8033
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I have lots of CO / unit leader related questions ... 

Questions triggered by our own scouting unit.  We cleaned up files no one wanted to store in their own garage.  We were chatting about unit history.  ... etc ... 

 

QUESTION #1  ... Establishing CO liability ... 

This seems like it will not be easy at all for probably up to half the units?  Does that sound right?  Our unit doesn't have any reported cases from any time ... I believe.    ... but if it did ...

Reason #1  Lack of historical CO knowledge ... A few of our leaders know our unit had multiple COs.   Last 20+ years under one church  ... before that a fire department ... before that another church.  ...  I'm not sure you could find the rechartering paperwork for our unit from the 1980s as record systems changed and councils merged and threw away paper files.  ...  I doubt you could find alive the people that did the paperwork.  Even then, I think we had years where we were chartered by one organization but met elsewhere.   ... So if a case was from May 1979, I think we'd be hard pressed to "prove" who chartered the unit.  It seems a large percent (at least 20% ... 40%? ... 60%?) will have a hard time "proving" who the CO was at the time of the incident.   If you can't prove, does a church become liable because they met there?  Or for a unit that was chartered as "parents of" met at a church???  ... My question is it seems establishing CO liability will not be automatic or easy at all.   For some yes.  For many no.  I'm not sure the scout's own records will be evidence of proof.  ... It seems like you need the paperwork with the signature of the charter org exec for that exact year.  

Reason #2  Accuracy of council records ... BSA previously legally penalized for fake records.  Ghost units.  Ghost membership.  ... BSA notorious for out of date / inaccurate records.  Many units had leaders on the registration that left a year or two earlier.  Many had current leaders that failed to get on the registration for years.  ... Until fairly recently, BSA's membership records have been bad.

Reason #3  Acknowledgement of signature ... There have been cases where the paperwork was signed by someone else.  I'm not sure the CO even knew they renewed the charter.  I'm betting you can find historical evidence of the DE signing.  In ours, I'm betting the SM may have expedited paperwork at times.  

 

QUESTION #2 ... Inheriting CO liability from another CO

If a unit moves charters ... and this is very common ... does the new CO inherit liability? 

Reason #1 Purchasing companies inherit the liabilities of the purchased companies. 

Reason #2  Often material possessions are transferred when COs are changed.  (bank accounts, tents, stoves, trailers, etc).  

 

QUESTION #3  ... Document retention by unit volunteers ... I fear even asking this one.

Are units required to retain documents?  We are "registered" BSA leaders and there are multiple lawsuits.

Our unit purged files.  ... No one even thought about lawsuits.  But we had 10+ cardboard file boxes of annual planning, membership, advancement, rechartering, dues, finanes, Troopmaster backups, etc.   We purged almost all.  We said we're depending on ScoutNet and ScoutBook.  Though I'm not sure I care as we were never told to keep files and we're not subject to a suit right now ... but ... 

 

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19 hours ago, fred8033 said:

 QUESTION #2 ... Inheriting CO liability from another CO

If a unit moves charters ... and this is very common ... does the new CO inherit liability? 

It's possible.  The CO owns the unit.  

I never liked the idea of transferring units and CO shopping.  This adds one more reason for me to dislike the practice.  A new CO should always start out with a new unit.  New number and everything.  No inherited baggage.

I've been hearing that some councils don't want to take on the charters of these old legacy units.  Do you think they might know something about this inherited liability question? 

As usual, not a word about it from BSA.

 

Edited by David CO
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Perhaps our legal experts can weigh in but I would think there would typically be no assumption of previous liability in the transfer of a Scouting unit by one CO to another.

Here is my thinking:

The term "ownership of a unit" is used very loosely. 

Individual Scout units typically (always?) would not be legally incorporated entities in and of themselves.

In most states, the change of ownership is a multi-step process that concludes with a filing with the Secretary of State's office. There is a very specific process that must be followed including filing fees.  In most cases, you must submit paperwork on an annual or bi-annual basis to the state. This obviously does not occur on the unit level with the exception of a "Friends of Troop xyz" group which has incorporated.

The only instance that I can think a new CO would be at risk in assuming sponsorship  of an existing unit would be  if they were negligent in some way in screening and signing off on the leadership or failed to maintain appropriate future oversight. 

But, I would welcome differing opinions from those who are more knowledgeable in this area.

 

Edited by gpurlee
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On 9/14/2021 at 6:28 PM, ThenNow said:

I have no clue whatsoever where to put this. Maybe it’s here? Maybe it’s not? Maybe nowhere? Maybe it doesn’t matter anymore? I can assure you, there’s no legalese and it relates to this Chapter 11. Specifically, its impact on a victim claimant such as I. So that aside, here’s an update on what this process means to me. I would say it can serve as my start of the year report on, “How I spent my summer vacation,” but I spent two on this mess and lots of months in between. To be exact, 1 year, 6 months and 27 lovely days has BSA Chapter 11. 

So, given my mental, physical and psychological state over the past 574 days, my trauma therapist insisted we do updated testing to determine if I am still in the land of the living or swinging wide toward vapor. The tests I took are noted below. They are pretty fun. You should try a handful sometime. Long story not quite short, this dealio we’re in the midst of landed me on George Jetson’s treadmill. I am vigorously engaged, but slip sliding in retrograde motion. I’ve moved from the Recovery Phase to the Acute (Emergency) Phase of PTSD. WooHoo! Back to the future all over again. If anyone wonders what this is doing to the victims, now you know with sprinkles on top. Cheers. The End.

UPPS-Impulsivity scale

SADS-Social Avoidance and Distress Scale

PCL-PTSD Checklist

K10-Kessler Distress Scale

GAD-Generalized Anxiety Disorder Scale

FMPS-Frost Multidimensional Perfectionism Scale

ECR-Experience in Close Relationships Scale

DUDIT-Drug Use Disorders Identification Test 

DES-II-Dissociative Experiences Scale

DERS-Difficulties in Emotion Regulation Scale

DASS-Depression Anxiety Stress Scale

MMPI-3- Minnesota Multiphasic Personality Inventory

SCID-V-Structured Clinical Interview for DSM Disorders

egads!  I could imagine someone losing a degree of sanity simply from having to complete all of those test and scales and inventories - nevermind being made to think about how this is making you feel or that is making you react.

For me, this whole bankruptcy process has felt like it's been dragging on and on and on - and I am not a claimant.

I'm glad that you have a therapist and that your therapist wants to take the time to get a good assessment of how you are doing.  (I'm not so glad to hear that you are in less-than-stellar shape.)

So, @ThenNow - to you and all the other survivors out there - Keep surviving.

 

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6 hours ago, RandomScouter said:

nevermind being made to think about how this is making you feel or that is making you react.

For me, this whole bankruptcy process has felt like it's been dragging on and on and on - and I am not a claimant...

####

So, @ThenNow - to you and all the other survivors out there - Keep surviving.

There are a good number of us on the forum that have talked via DM and elsewhere about the longing we have for people, including the judge and BSA, to have a better appreciation for what this is “doing” to us. I really fault the media for not picking up the story and telling it deeply and thoroughly. I have given them innumerable opportunities and stories to tell, not just mine. The TCC members were interviewed for hours and mere blurbs were printed. Disheartening. It’s not too late to run a story. A post mortem would be in part great, in another part disrespectful lacking the timely purpose. This also goes to my feeling that the judge needs to hear from some of us in open court, sooner rather than later.

Thank you. When thriving is not in reach, surviving is the baseline. When surviving is the long-term baseline option, the body and mind have a difficult time surviving. It is the proverbial endless loop waiting for Ctrl+C. A conundrum in a sour pickle. A sticky wicket in a confounding dilemma. Elevated allostatic load. Das ist nicht so gut. 

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7 hours ago, gpurlee said:

The term "ownership of a unit" is used very loosely. 

This is precisely the correct observation.

Years ago, I reviewed many of the governance documents pertaining to National, Districts, and units.

They are a study in vagueness, ambiguity, and unworkable incompleteness-not a comprehensive governing plan.  I was unimpressed.

So, units, 100% in my experience, have no formal, legal. structure.

They are "unincorporated associations."

My state has laws pertaining to the formation, operation, governance of business corporations, not-for-profit corporations, professional corporations, banking corporations, general partnerships, limited partnerships, and such. ("Such" being villages, townships, soil conservation districts, park districts...all manner of legal entities.)

Those statutes provide for the creation of a new legal entity:  corporation or partnership.  Importantly, those statutes also provide rules pertaining to governance of the entity.  If the rules are followed, one can determine which individuals have legal authority to authorize actions in the name of the entity, and who is responsible for those actions.

Legal entities can own assets, incur debts, etc.

Unincorporated associations on the other hand are not a legally recognized entity.  It can be difficult to determine who (humans) are in charge and can make decisions that bind the association.  One typically sees this in small churches which never formed into a legally recognized entity.  They frequently end up in court battling over who "owns" the church, who is liable on the l.ease of the church meeting place (many are rented), who can hire or fire the pastor, and who controls the church bank account.  Typically, "Solomon splits the baby" and the losing faction moves on with some to none of the cash to lease another facility, paster in tow, or left behind.

So, does a CO "own" a unit?

One has to look at the many "incidents of ownership."

Governance:  CO's, by virtue of the Chartering Agreemednt have the right to designate or approve unit leaders.   My unit's CO has never spent a second troubling itself with designating a unit leader, and probably not a second actively "approving" a unit leader, but rather just signs off on the Chartering Agreement.  Unit leaders are generally selected by acclimation and their term of office is indeterminate.  Sometimes retiring, or being encouraged to step down to make way for new blood.  Corporate law typically provide for the designation of defined officer positions, define their duties and authorities, and provide for election procedures and terms of office.

Finances.  My unit makes all revenue and expense decisions, more or less by acclimation, or consensus. No particular vote.

Continuation of existence. National and perhaps an LC, can decline to renew a unit's charter for any or no reason.  Not so for corporations and other legally recognized entities.  It is not consistent with the concept of CO ownership of a unit that another entity can simply terminate the unit's existence.

Ownership of assets.  Who "owns" the unit's assets?  Bank account, camping equipment, and unit trailer?  I understand that if a unit folds, that is, does not renew its charter, or its charter is not renewed by BSA, that all the unit's assets become property of the LC.  So, if the CO "owns" the unit, why don't those assets remain with the CO? And for the CO to use them for scouting or any other purpose, scouting or not.  By what authority would those assets be restricted to scouting purposes only?  If by virtue of the Chartering Agreement, then the CO looks a whole lot less like it "owns" the unit because it does not have control of the assets the CO allegedly owns.  I've seen the current leadership of a unit, dissatisfied with a few trouble makers, who stirred up the CO, just up and leave the CO with all the equipment and bank account.  After a fair amount of table pounding, the CO just let it drop.  Does that fit the rules?  Who knows?  But the point is there ought to be rules that govern common situations that arise in CO and unit relations and governance.  

 

National's model of its relationship with CO's and units does not fit into established legal statutory schemes, leaving many open questions. And it may well lead to an unintended result, depending on the decision of the Judge, who may very well advise everyone wha the rules are.

When things are going well and unit assets are being used to make the model work, no one seems to care what the rules are.

As there are 50 states, some states may have either statutory law applicable to unincorporated associations, and almost certainly a body of case law wherein courts have decided cases such as the church splits.

 

 

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19 minutes ago, SiouxRanger said:

Governance:  CO's, by virtue of the Chartering Agreemednt have the right to designate or approve unit leaders.   My unit's CO has never spent a second troubling itself with designating a unit leader, and probably not a second actively "approving" a unit leader, but rather just signs off on the Chartering Agreement.  Unit leaders are generally selected by acclimation and their term of office is indeterminate.  Sometimes retiring, or being encouraged to step down to make way for new blood.  Corporate law typically provide for the designation of defined officer positions, define their duties and authorities, and provide for election procedures and terms of office.

And herein lies the problem since at least the 1920s not only the annual charter renewal document but what would later evolve into the Adult Application made it clear that "Institutional Head" (which later split into the CO and IH) was approving those adult leaders and agreed to exercise oversight.

This isn't about incorporated entity; this is about the idea that the scouting unit for legal and other purposes was considered a part of/program of the chartered organization.

The equivalent would be if the Pastor of the local church approved a parish member to be the volunteer head of the youth choir and signed a document saying the Pastor had reviewed the person's character and vouched for him/her AND agreed to exercise control and oversight. The head of the youth choir is then found to have molested members of the choir. Clearly, the pastor took on the role and responsibility in his capacity as pastor to oversee that program.

That the COs failed to read the documents put under their noses is neither here nor there. The fact is they bound themselves to these units, agreed to approval of the unit's leaders AND signed documents that they had reviewed those leaders (at least annually re-approving them). They have two choices:

1) Admit they had no idea what was going on in that unit despite the signatures. That's literally the definition of negligence.

2) Admit they had an idea but did nothing. Now we have willful indifference/deliberate indifference. That's actually WORSE from a legal standpoint.

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4 hours ago, CynicalScouter said:

And herein lies the problem since at least the 1920s not only the annual charter renewal document but what would later evolve into the Adult Application made it clear that "Institutional Head" (which later split into the CO and IH) was approving those adult leaders and agreed to exercise oversight.

This isn't about incorporated entity; this is about the idea that the scouting unit for legal and other purposes was considered a part of/program of the chartered organization.

The equivalent would be if the Pastor of the local church approved a parish member to be the volunteer head of the youth choir and signed a document saying the Pastor had reviewed the person's character and vouched for him/her AND agreed to exercise control and oversight. The head of the youth choir is then found to have molested members of the choir. Clearly, the pastor took on the role and responsibility in his capacity as pastor to oversee that program.

That the COs failed to read the documents put under their noses is neither here nor there. The fact is they bound themselves to these units, agreed to approval of the unit's leaders AND signed documents that they had reviewed those leaders (at least annually re-approving them). They have two choices:

1) Admit they had no idea what was going on in that unit despite the signatures. That's literally the definition of negligence.

2) Admit they had an idea but did nothing. Now we have willful indifference/deliberate indifference. That's actually WORSE from a legal standpoint.

I am with you on this.  

National postures the unit as part of the CO through the rechartering agreement, though in practice, may CO's do not fulfill their role.  And yet, unlike the choir teacher, or even members of the choir, NATIONAL has its "Standards Of Membership And Leadership" by which NATIONAL can expel a member of the unit theoretically under the control of the CO.  So, National delegates responsibility to the CO, yet retains authority to to meddle in the unit's internal operations.  And to terminate a unit's charter.  I doubt many or any church choirs are subject to such third-party control.

I doubt any franchise model (something akin National's model) allows the franchisor, to hire and fire a franchisee's staff.  "Hello-your fry cook there-they've got to go."

National has a hybrid "franchise model."

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On 9/19/2021 at 1:34 AM, fred8033 said:

QUESTION #2 ... Inheriting CO liability from another CO

If a unit moves charters ... and this is very common ... does the new CO inherit liability? 

Reason #1 Purchasing companies inherit the liabilities of the purchased companies. 

Reason #2  Often material possessions are transferred when COs are changed.  (bank accounts, tents, stoves, trailers, etc).  

"Purchasing companies" generally involves two legally recognized entities engaging in either an asset purchase, or a stock purchase, pursuant to written a written contract wherein the retention or assumption of existing liabilities is provided for.  Consideration is paid or not, depending on the amount of liquidated liabilities, or the risk of known unliquidated liabilities and unknown liabilities.

Even where a company assumes the liabilities of a selling company, that assumption does not relieve the selling company of its liability to the person or entity to whom it was-and remains-liable.  The assuming company is agreeing to indemnify and sold the selling company harmless.  The third party creditor/claimant can pursue the selling company.

I think it would be a hard case to persuade anyone that the assets transferred to the new CO are in any way commensurate with the amount of potential liability assumed.  Several thousand dollars of equipment and cash-all used to just barely cover unit operations-was intended by either the old CO or the new CO to cover abuse claims.

My bet is that the new CO has no liability for claims arising before it was the CO.

13 hours ago, gpurlee said:

The only instance that I can think a new CO would be at risk in assuming sponsorship  of an existing unit would be  if they were negligent in some way in screening and signing off on the leadership or failed to maintain appropriate future oversight. 

I agree.  Unless an entity assumes past liabilities of another, an entity is only liable for its own acts and omissions-present and future.

14 hours ago, David CO said:

I never liked the idea of transferring units and CO shopping.  This adds one more reason for me to dislike the practice.  A new CO should always start out with a new unit.  New number and everything.  No inherited baggage.

I've been hearing that some councils don't want to take on the charters of these old legacy units.  Do you think they might know something about this inherited liability question? 

My comments above notwithstanding, starting out new across the board is safest:  new CO and new chartering agreement, with the new CO actually vetting unit leaders.  It establishes a date at which the new CO became the CO, and the date on which its responsibilities and duties commenced.

As we have seen, the last thing one wants to do is be in court talking.  It is very expensive, surrenders control over decisions that may potentially destroy the business to a person that cannot, by the very nature of the process, have a complete picture.  National, like so many entities that have fled to the expedient shelter of cover-up, faces potential annihilation.

Edited by SiouxRanger
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4 minutes ago, SiouxRanger said:

My comments above notwithstanding, starting out new across the board is safest:  new CO and new chartering agreement, with the new CO actually vetting unit leaders.  

A new unit number too.  Promotes a new separate identity so that previous history is previous history.  Probably legally meaningless, but it would help identify that it was a different organization.  

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15 hours ago, SiouxRanger said:

Finances.  My unit makes all revenue and expense decisions, more or less by acclimation, or consensus. No particular vote.

<snip>

Ownership of assets.  Who "owns" the unit's assets?  Bank account, camping equipment, and unit trailer?

Especially when a unit has its own EIN, opens banking and savings accounts with people unrelated to the CO, and has no reporting or auditing done by the CO. Are these really the CO's assets? Show me where they could assert that? They don't control accounts, they don't make withdrawals or deposits, and they don't audit them or provide any oversight. Nor do they really know of their existence. 

The Girl Scouts are very different in that each year you have to file a financial report and reconciliation. Our GSUSA checking is technically a sub account at a local bank. I almost had 350 units statements going to my house when the banker was setting our account up.  She was like "oh, woah, ok, I almost had all statements going to your house from all units". 

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