Chapter 11 Announced - Part 8 - TCC Term Sheet & Plan Confirmation

[Eagle1993 2160]

So, based on today's status hearing.

1) BSA is running out of money.  Everyone seemed to agree they are in serious trouble.  They may need to use the few million from Scouting U to keep operating.  I get the sense that there is a strong possibility BSA is on the edge of Chapter 7.  TCC legal team looked a bit grey when talking about the timelines and how important it was to get to the hearing as quickly as possible.  I get the sense that if this plan fails, BSA probably doesn't have enough in the tank to take another shot and may just go Chapter 7.  Perhaps this got TCC and others on board (along with the changes).

2) It sounds VERY likely that the plan we see Monday is the plan.  The judge says in bankruptcy, settlements change; however, she indicated that at some point you need to stop.

3) I believe the plan will be confirmed.  There will be more changes through the hearings.  However, I have the sense that the framework is there ... it is a matter some language here and there.  Perhaps even eliminating the $20K charge but make a tiered TDP.  Releases/injunctions may change a bit.  But overall, the plan will be close to the one Monday that is confirmed.

4) The hearings will take a while ... 50 hours was mentioned but that may be on the low side.  March 9 it starts, guessing ... I think it takes a full 3 weeks then 1 week following to get a ruling.  My over/under for the ruling is April 6.

5) This plan will be appealed (either to an appeals court first or just fight at district).  I have no idea what will happen there; however, if this plan is scuttled, I think it is more likely to be scuttled in district court than bankruptcy court.  In fact, I wouldn't be surprised if this happens.  If this happens on the Purdue Pharma timeline (and April 6 is correct guess) the plan could be overruled mid July.  

Now assuming district confirms the bankruptcy, appeals could still happen, but at least the plan would be confirmed and BSA would start exiting bankruptcy.

So ... my guess right now, is exit from bankruptcy (with district court approval) by August 1.  However, a lot of risk.

 

[vol_scouter 365]

@Eagle1993  Your evaluation sounds likely but I doubt that the BSA can survive while hemorrhaging money to attorneys until 1 August.  There has been solid membership growth but I doubt that it can allow things to go on.  
 

What a sad situation.  

[Eagle1993 2160]

2 minutes ago, vol_scouter said:

@Eagle1993  Your evaluation sounds likely but I doubt that the BSA can survive while hemorrhaging money to attorneys until 1 August.  There has been solid membership growth but I doubt that it can allow things to go on.  
 

What a sad situation.  

I think the costs drop substantially by end of March.  Since the TCC, FCR will likely not appeal, their costs should almost go to $0.  Even the costs in district/appeals court should be a lot less (no voting to pay for, etc.).  Looking at the history, early on they were spending at times less than $1M per month.  I could see us return to $1-$2M per month vs $10M right now.  

However, if this plan is rejected ... I am VERY concerned.  I think this is the last swing of the bat.

[ThenNow 1373]

24 minutes ago, vol_scouter said:

I doubt that the BSA can survive while hemorrhaging money to attorneys until 1 August.  There has been solid membership growth but I doubt that it can allow things to go on.  

 

19 minutes ago, Eagle1993 said:

I think the costs drop substantially by end of March.  Since the TCC, FCR will likely not appeal, their costs should almost go to $0.  Even the costs in district/appeals court should be a lot less (no voting to pay for, etc.).  Looking at the history, early on they were spending at times less than $1M per month.  I could see us return to $1-$2M per month vs $10M right now.  

However, if this plan is rejected ... I am VERY concerned.  I think this is the last swing of the bat.

I know! Debtor counsel can waive their fee until this is over and give the balance of the 10% they didn’t offer up (as PSZJ did) to fund the trust. Problem solved, no? If I were in the development office of BSA I know the first calls I’d be making once this is a wrap. 

Edited February 11, 2022 by ThenNow

[1980Scouter 99]

While definite progress as been made which is good. There are still too many objections to the current plan. 

While it is impossible to get all on board I think there are still key players with objections. 

I think a late summer date for this to be settled is optimistic. It will likely be much longer.

One other issue is CO's and their future with BSA. If they lose catholic and other CO's this would likely end the program. No protection for CO's not contributing is the surest way to do this. I think this is where LC's could step in and fund releases. They are truly who is responsible for oversight of CO's and did not do their job. I struggle to see why any CO would take the risk in the future to sponsor a unit. Even if it is a core part of their ministry the risks are too great.

[fred8033 1592]

7 hours ago, Eagle1993 said:

I get the sense that if this plan fails, BSA probably doesn't have enough in the tank to take another shot and may just go Chapter 7. 

#1  Was there any talk of the toggle; BSA only bankruptcy? 

#2  How much would be available to victims?  

#3  Would victims get more than current path?

I'm assuming LCs would not be pulled into BSA's chapter 7.  Still a possibility, but far shot from what I've read.  With Summit and Philmont debt laden and employee retirement programs ... and other legal cases ... and then the legal cost to liquidate assets that could be challenged, would victims really get more from chapter 7?  ...  Feels like this is a game of chicken where the cars crash full speed into each other.  

I just don't see an agreement happening and also surviving all the challenges.  I am hoping the BSA only is a real option.

I hope not but I'm thinking about what would happen?  Would this be treated as a franchisor / franchisee bankruptcy?  BSA liquidates and LCs sue to keep using IP to avoid harm?   Or LCs form a weak association to purchase the intellectual property at firehouse values?  

 

[Eagle1993 2160]

10 hours ago, 1980Scouter said:

One other issue is CO's and their future with BSA. If they lose catholic and other CO's this would likely end the program.

I'll be blunt. Most COs provid almost nothing to the program.  The Methodist just released a joint statement with the BSA that they are on board and working on a new chartered organization agreement language.  BSA just needs a way to have units charter with councils (like Girl Scouts) and for the most part they will be fine.  That said, losing the Catholic Churches would definitely hurt.  

 

My unit already discussed and we would prefer no CO over our current one. They provide no meeting space, no money, are tough to find to sign off on leaders and charters.  

Edited February 12, 2022 by Eagle1993

[Eagle1993 2160]

7 hours ago, fred8033 said:

#1  Was there any talk of the toggle; BSA only bankruptcy? 

 

No, none.  A few references to Chapter 7 but not by BSA and only in passing.

 

7 hours ago, fred8033 said:

#2  How much would be available to victims?  

 

The ~$2.7B initially.  The trustee would be empowered to go after non settled chartered orgs, non-settled insurance companies (national BSA insurance, LC insurance and it sounds like CO insurance).  The Roman Catholics are VERY upset that the non-settled COs have their own insurance now targeted with this plan.

7 hours ago, fred8033 said:

#3  Would victims get more than current path?

 

They have 3 paths.  $3500 or TDP just like previous.  TDP requires more documentation and the trustee (designee) would determine payout based on TDP scales.

The 3rd path is the neutral.  A party (likely retired judge) would basically oversee a trial.  The claimant would have to provide $20K + a ton of documentation.  They would have to be examined by a psychologist (possibly).  Sit through cross examination from lawyers (probably from insurance companies).  After this "trial" the "neutral" would determine liability and damages as if it were a state case.  Then, the claimant would get 100% of those damages.  Up to $1M would come directly from the trust.  Everything over $1M would come from the excess trust fund that is collected from the groups I mentioned in your 2nd question.  

7 hours ago, fred8033 said:

I hope not but I'm thinking about what would happen?  Would this be treated as a franchisor / franchisee bankruptcy?  BSA liquidates and LCs sue to keep using IP to avoid harm?   Or LCs form a weak association to purchase the intellectual property at firehouse values?  

 

I think basically everything is sold (trademarks, property, etc.).  Then claimants are paid after secured debtors are paid.  I doubt LCs would be pulled in.  

To me, if this plan doesn't go through this path there are two options.

Option 1 - Chapter 7

Option 2 - BSA charges all LCs an assessment.  Perhaps $500K each, one time charge.  If you can't afford it, merge with another council.  Lets say half councils merge, they would get $62.5M ... enough to probably last 6 more months in bankruptcy.

 

[RememberSchiff 3663]

(U.S. Trustee) Buchbinder argued in a Monday court filing the plan cannot be confirmed if provisions allowing non-debtor third parties to be released from liability without the consent of holders of abuse claim remain in place. He argued that the third-party releases for local Boy Scout councils, certain troop sponsoring organizations and settling insurers violate the due process rights of claimants and are not authorized under the bankruptcy code...

Meanwhile, critics of the plan note that, under the changes unveiled Thursday, the BSA appears to be backing away from the findings of its own hired expert regarding the value of abuse claims. The Boy Scouts now assert that the conclusions of Charles Bates have not been agreed to by any other party, and that his conclusions are not a binding estimation of the BSA’s liability. The BSA also said it will consult with abuse claimants’ attorneys who are supporting the plan on what testimony Bates should provide.

More at source Randall Chase:

https://www.fairfieldcitizenonline.com/news/article/Judge-delays-start-of-Boy-Scouts-bankruptcy-plan-16911615.php

Good-bye Eric Green and now Charles Bates.

Edited February 12, 2022 by RememberSchiff

[Eagle1970 210]

18 hours ago, ThenNow said:

Yup. I don't think the key votes move from reject to accept without the significant multiplier on the "high value" claims.

On the notion of high and low value claims, I saw my psychiatrist this week. Of course, we were talked about the case including the range of potential awards. I thought she was going to fall out of her chair, throw something and/or pull out her hair. She was aghast. I know, I know. There's no money. 55,000+/- of us are Shades of Gray and should be happy to get something rather than nothing. Forgetting that, this is how people in the real world, not to mention those who work with trauma patients every day, feel when they hear about the case. High rollers get access to the high value. Mr. B is not happy.

PS - I don't know if the high entry fee mini-trial is the right thing or not. It certainly is a creative and expedient way to accommodate the disgruntled open state folk. All I know  is how I feel. Right now, it's pretty much like I wasted two years of premature hair loss, stomach lining, sleep and relative peace of mind. Likely my own fault. 

I empathize and agree regarding the value of "awards".  Clearly, open state claimants are going to get a large portion of the pool, which I continue to believe is criminal (not in the legal sense, rather the moral).  One stipulation though, regarding shades of Gray.... I'd sure rather be in Gray 1 than my happy home of Gray 3.  The whole Gray scale drives me to drink.  You are either closed or open.  Gray 1,2,3 classification is arbitrary, and I'm sure there were cases where it was a coin toss between the categories.

[vol_scouter 365]

24 minutes ago, Eagle1970 said:

I empathize and agree regarding the value of "awards".  Clearly, open state claimants are going to get a large portion of the pool, which I continue to believe is criminal (not in the legal sense, rather the moral).  One stipulation though, regarding shades of Gray.... I'd sure rather be in Gray 1 than my happy home of Gray 3.  The whole Gray scale drives me to drink.  You are either closed or open.  Gray 1,2,3 classification is arbitrary, and I'm sure there were cases where it was a coin toss between the categories.

I agree with the arbitrary nature of the gray scale.   Trying to judge whether a state will change the laws in the next few years is ludicrous.   Citizens and politicians could get together in a state where everyone believes such actions will not happen for a swift change whereas another state that seems on the verge of change could take years or never happen.   Same thing in trying to assign how likely it would be for a child abuse lawsuit to result in a large award.   Historical precedents may or may not hold.

[vol_scouter 365]

1 hour ago, Eagle1993 said:

9 hours ago, fred8033 said:

 

I think basically everything is sold (trademarks, property, etc.).  Then claimants are paid after secured debtors are paid.  I doubt LCs would be pulled in.  

To me, if this plan doesn't go through this path there are two options.

Option 1 - Chapter 7

Option 2 - BSA charges all LCs an assessment.  Perhaps $500K each, one time charge.  If you can't afford it, merge with another council.  Lets say half councils merge, they would get $62.5M ... enough to probably last 6 more months in bankruptcy.

It is more likely to be successful if the BSA asked for some particular sum of money that the Ad Hoc committee would then determine how is the most fair way to raise the money.   This is path is far from a certain approval from the councils.  They would rightly be concerned that it would be the first of several appeals.   Council Executive Boards would be wary.  Especially because if the path fails to deliver a release for the councils, then they will need that money for their own legal defense.

One can only hope that this plan goes through because other options are much more damaging to Scouting and will likely only help claimants marginally if at all.  Also, other paths will require a much longer time before claimants see any pay out.

[SiouxRanger 490]

54 minutes ago, Eagle1970 said:

Clearly, open state claimants are going to get a large portion of the pool, which I continue to believe is criminal (not in the legal sense, rather the moral). 

I can's say as I understand you.  Could you explain? Thanks.

[Eagle1993 2160]

20 minutes ago, vol_scouter said:

Council Executive Boards would be wary.  Especially because if the path fails to deliver a release for the councils, then they will need that money for their own legal defense.

I think the only councils that would be 100% on board are those that are likely to go into bankruptcy if that National plan falls through.  Even for my council, at some point it may be better to just let national go under and save as much money as possible.  There is definitely a balancing act.

I agree ... if BSA asks for a big payment to continue, it would probably go through the Ad Hoc committee.

[vol_scouter 365]

15 minutes ago, Eagle1993 said:

I think the only councils that would be 100% on board are those that are likely to go into bankruptcy if that National plan falls through.  Even for my council, at some point it may be better to just let national go under and save as much money as possible.  There is definitely a balancing act.

I agree ... if BSA asks for a big payment to continue, it would probably go through the Ad Hoc committee.

My understanding is that there is one council that has only one non-SOL barred lawsuit that would be in a good position if this falls through.  All other councils have more.   Before the BSA filed for Chapter 11, some suits were settled for several million dollars.   It will not require many of those for a council to be in bankruptcy.  
 

My guess is that nearly all councils would end up in bankruptcy proceedings within a few years.   Of course, that prolongs awards to victims and likely reduces the amount that they can receive.  The councils will argue that the camps and offices are core to delivering the mission and that restricted gifts cannot be used.   The largesse some believe councils possess is just not there.

The victims could face years more of court proceedings for little if any gain.   I fail to see that such a course serves them well.  I do not see the councils filing chapter 7 and organized Scouting going away.