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Chapter 11 announced - Part 11 - Judge's Opinion


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I have nothing to say that is worthy of much attention, other than I am SOOO VERY grateful for Eagle1993 and his excellent reverse engineering of this opinion, and other such. I, for one, am indebted

Final plan & exhibits were uploaded last night.  Century supports the updates; however, we may see some fireworks with Guam and possibly the judge.   3b0d7c7a-ca0e-4eab-ad84-f43950dc2b65_1029

A flurry of action today: - The Judge approved the BSA/GSUSA agreement to stop suing each other: cd5eb23c-6a2c-4c70-a015-dc989fbfd257_10193.pdf (omniagentsolutions.com) - The US Trustee/DOJ

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Hope this will be allowed.  I thought of BSA's bankruptcy when I listened to the settlement in the Florida condo collapse.

https://www.miamiherald.com/news/local/article265041154.html

  • Lawyer hourly fees can have a 4.x multiplier in Florida
  • The one year case had 17 law firms (132 attorneys, paralegals and assistants) who recorded 34,200 hours.   ...  Image of Tom Cruise Xeroxing time sheets in the Firm.
  • Melded rate (attorney, paralegals, assistants) of $715 ... expensive paralegals and assistants.  Total $24.7 million.  Could have been 4.5x resulting in $100m legal fees.
  • Judge awarded 3x for multiplier - awarded $65m legal fees
  • Settlement was $1.1 billion

Attorney fees were 6.5 % of settlement.  A success considering normal 25% to 30% fees.  

Lots to discuss even in this case, but at least victims families did well in the settlement.

Made me think about BSA's bankruptcy.

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17 hours ago, fred8033 said:

A success considering normal 25% to 30% fees.  

I've often wondered this (what is a typical fee to settlement ratio) and never found a good source. If the above is normal, wouldn't the fees in this case be about 50% less than normal? 

$2.7B x 0.25 = $675MM and $2.7B x 0.3 = $810MM. Currently at $368MM. 

(BTW, I'm not a lawyer!)

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37 minutes ago, clbkbx said:

I've often wondered this (what is a typical fee to settlement ratio) and never found a good source. If the above is normal, wouldn't the fees in this case be about 50% less than normal? 

$2.7B x 0.25 = $675MM and $2.7B x 0.3 = $810MM. Currently at $368MM. 

(BTW, I'm not a lawyer!)

I greatly appreciate Eagle1993 adding the values together.  

The current fees are $368m. 

  • How much further will it go?  six months more?  a year? 
  • How much to setup and administer the trust?   Assuming trust goes for years.
  • What percent of individual awards go to the individual lawyers?  

BSA brought about $400m to the bankruptcy.  So, fees will be at least 100% of the BSA bankruptcy.  Effectively, the whole bankruptcy was re-invested / gambled as legal fees to negotiate with insurance companies. 

My big fear is ... If 3rd party releases are appealed and decided illegal and insurance companies withdraw, the available funds go to zero.  ...  The whole idea of large legal fee awards in cases like this is that the legal firms are taking on huge risk to pay the cost up front.  ... I just don't see that in this case. 

I question whether we will ever understand how much went to the actual victims.  I completely don't understand outside of pre-billed feels versus award sharing percentages.  How much of individual awards will be split with their individual lawyers.  If a victim gets awarded $100,000, will $25,000 / $30,000 go to their representing lawyer?  If the lawyers firm billed fees in this case, will the lawyer also get a high percent of the award?  Lower percent?  No share?  
 

Edited by fred8033
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46 minutes ago, fred8033 said:
  • How much further will it go?  six months more?  a year? 
  • How much to setup and administer the trust?   Assuming trust goes for years.
  • What percent of individual awards go to the individual lawyers? 

Thanks @fred8033. I didn't think the bottom two should be included when weighing the typical range but, like I said, I haven't been able to find any good reference for that. Administration is estimated around 10% and lawyer contingency fees are typically around 30% so right away you're at 40% not being paid out to survivors (assuming most are being represented by counsel). 

The BSA costs always seem to me to be about it's continued viability. They're not adding or subtracting to the amount they put into the Trust based on what it takes to get through bankruptcy. 

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1 minute ago, clbkbx said:

The BSA costs always seem to me to be about it's continued viability. They're not adding or subtracting to the amount they put into the Trust based on what it takes to get through bankruptcy. 

@clbkbx ...   What portion of the $368m are BSA side legal fees versus victim representative fees vs other fees ? 

If the court approves the fees, then it's the cost of the bankruptcy and reduces what was available at the start of the bankruptcy.

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32 minutes ago, fred8033 said:

@clbkbx ...   What portion of the $368m are BSA side legal fees versus victim representative fees vs other fees ? 

If the court approves the fees, then it's the cost of the bankruptcy and reduces what was available at the start of the bankruptcy.

Hi @fred8033... to the first question, I only know that's broken down in the filings including the by-firm table that was posted above which gives a good overall sense.

I thought that in your initial post you were saying something along the lines of: an entity pays X fees to get to Y settlement (basically, what is BSA going to pay out of pocket to get through bankruptcy) and that X is normally 25-30% of Y. It seems like I might have been mistaken. 

For the second part, I think we are saying the same thing. The BSA is putting a certain amount ($500k iirc) into the Trust regardless of what payments they make to get through the process. Everything they pay out for the bankruptcy reduces what's they have available for operating going forward.

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5 hours ago, clbkbx said:

Hi @fred8033... to the first question, I only know that's broken down in the filings including the by-firm table that was posted above which gives a good overall sense.

I thought that in your initial post you were saying something along the lines of: an entity pays X fees to get to Y settlement (basically, what is BSA going to pay out of pocket to get through bankruptcy) and that X is normally 25-30% of Y. It seems like I might have been mistaken. 

For the second part, I think we are saying the same thing. The BSA is putting a certain amount ($500k iirc) into the Trust regardless of what payments they make to get through the process. Everything they pay out for the bankruptcy reduces what's they have available for operating going forward.

$500k?  Thousand or million?    I originally heard BSA was bringing around $400m to the bankruptcy.  I thought that was both proceedings and money that could be used to pay debts.  

... reduces operating going forward ... I never understood that.  It seems backwards.  If money can be afforded to pay for the bankruptcy proceedings, then any unspent in that gray affordable money area that could be spent would be best sent to debtors ... or I thought I'd imagine.

It goes to show that I really don't understand the ugly finances of a bankruptcy.   

I read the earlier list of who is billing what, but it really doesn't make sense to me still.

QUESTION? ... $368m ... Can someone frame the court approved fee payments in a more basic primitive manor?  administrative fees (appraisals, etc) versus BSA defense council fees versus victim advocate fees (TCC, etc) ?  Or victim advocate fees routed through any of the BSA council invoices or are they completely separate?  

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6 minutes ago, fred8033 said:

$500k?  Thousand or million?

What’s a few zeros at this point?! 
 

You are, of course correct. It was something around $500 million. 

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12 hours ago, clbkbx said:

I've often wondered this (what is a typical fee to settlement ratio) and never found a good source. If the above is normal, wouldn't the fees in this case be about 50% less than normal? 

$2.7B x 0.25 = $675MM and $2.7B x 0.3 = $810MM. Currently at $368MM. 

(BTW, I'm not a lawyer!)

$368M isn't the total fees.  Don't forget that every claimant that has a lawyer will pay a large portion of their claim to them.  In addition there are large bills that have yet to be decided from the Coalition.  $368 is simply the direct bankruptcy costs paid by BSA.

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11 hours ago, fred8033 said:
  • How much further will it go?  six months more?  a year? 
  • How much to setup and administer the trust?   Assuming trust goes for years.
  • What percent of individual awards go to the individual lawyers?  

BSA's involvement will drop way off if the plan is confirmed.  They will have to still cover the cost of sending it to district and perhaps some appeals but I expect those costs will be far less than their $13M+/month they have been averaging.  If all goes well, my understanding is 2 months for District approval (December) and perhaps several months after for appeals.  Now, if the Purdue appeals court overturns their bankruptcy case BSA's plan could be in trouble.  

All the trust costs come from that fund, not the BSA.  The settlement trust will pay those fees.

I understand that varies. I have heard anywhere from 33-50%.  

 

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33 minutes ago, Eagle1993 said:

$368 is simply the direct bankruptcy costs paid by BSA.

This is just what I wanted to know… is there a normal ratio of expenses to settlement amount? From what I’ve read and this discussion, it seems to vary quite a bit.

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8 hours ago, clbkbx said:

This is just what I wanted to know… is there a normal ratio of expenses to settlement amount? From what I’ve read and this discussion, it seems to vary quite a bit.

It looks like USA Gymnastics had costs in the range of $20M ... tough to really see.  Their settlement was 380 so cost was about 5% of the total settlement.  

 

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