Iskcon's Chapter 11 Bankruptcy case

Litigation Against ISKCON WV
On February 5, 2002, a Civil Action was filed against ISKCON WV by a number of plaintiffs, entitled Children of ISKCON, et al. vs. ISKCON, d/b/a the International Society for Krishna Consciousness, et al (Litigation). The plaintiffs are seeking damages in excess of $1.4 billion.

The Litigation asserts allegations pertaining to various forms of alleged abuse that occurred at various schools operated by independent affiliates of ISKCON, including ISKCON WY. Although the specific claimants and details of the alleged abuses are not specifically spelled out in the Litigation, it may be assumed that the nature of the alleged abuse and the injuries claimed by each participant will vary greatly.

ISKCON WV Bankruptcy Filing and Case Status
On April 16, (May 23), 2002 the Debtor filed for protection under Bankruptcy Code Section 11 in the Northern District of West Virginia. The Debtors cases are being administratively consolidated for the convenience of the court.

The impetus for the filing by the Debtor was the result of Civil Action brought by a plaintiff titled the Children of ISKCON. In the suit, the Children of ISKCON have alleged various child abuses and is seeking restitutions from the Debtors and other named parties in the amount of $1.4 Billion.

To date a total of 540 claims have been filed in bankruptcy court related to this action, of which 200 claims were filed by foreign nationals.

Of the 340 claims filed by U.S. based claimants, some may be filed individually while others may be litigated through an aggregate claims proceeding. In addition, claims may be filed in multiple jurisdictions. Nevertheless, it can be expected that litigation will involve pre-trial activities and pleadings, discovery, investigation and trials. In addition, counsel may need to engage expert witnesses.

The Debtor's corporate counsel has obtained a preliminary estimate from litigation counsel on the cost to defend ISKCON against this claim. Litigation counsel has estimated that defense cost related to approximately 350 claims would be $20,500,000. This potential cost has not been included in this valuation.

Events Leading to Chapter 11 Filing

Here is a brief summary of the circumstances that led to the filing of the Debtors Chapter 11 cases:

The Debtors filed for chapter 11 primarily because of an inability to pay the cost of defense of the Court Actions commenced by the Plaintiff Tort Claimants. In addition, Chapter 11 provided a means of ascertaining all of the creditors asserting Tort Claims against the Debtors, including without limitation, claims arising from acts occurring at religious schools. The primary purpose of the Chapter 11 Plans is to enhance the funds available to redress bona fide tort and other claims while maintaining the viability of the religion and religious purpose, by among other things, proposing a streamlined procedure for determining Claims and reducing expensive and time-consuming litigation which would ultimately reduce the distribution available to bona fide Claimants.

The principal intent of the Debtors' filings is to provide as much compensation as possible to legitimate victims of alleged child abuse. As a result, the Debtors sought contributions from other non-debtor ISKCON entities in order to assist in the funding of their Plans. On October 25, 2001, a number of individuals (the "Plaintiffs") commenced an action entitled Children of ISKCON, et al. v. ISKCON, a d/b/a the International Society for Krishna Consciousness, et al., Case No. 01-9282 pending before the 192 District Court, Dallas County, Texas ("Texas Court Action") against the Debtors, the West nd Virginia Debtors, and other defendants by alleging such causes of action as negligence, breach of contract, battery and conspiracy. An identical civil action was filed in the Circuit Court of Marshall County on February 5, 2002, Civil Action Number 01-C-244K ("West Virginia Court Action"). Both the Texas Court Action and the West Virginia Court Action (jointly referred to as the "Court Actions") allege vague and ambiguous allegations pertaining to various forms of child abuse that allegedly occurred while the Plaintiff Tort Claimants were minors residing in various ISKCON boarding schools between the early 1970's and possibly into the 1990's, along with allegations of conspiratorial conduct extending to the present.

Although the Court Actions each list approximately 91 Plaintiff Tort Claimants and 48 defendants, the complaints fail to set forth the specific details of what happened to each of the Plaintiff Tort Claimants, where and when the alleged incidents occurred, who specifically administered the abuse, and how each, if any, of the named defendants are asserted to have been directly or indirectly responsible. The Court Actions do not specify the type and extent of damage that each of the Plaintiff Tort Claimants has purportedly suffered. Accordingly, it is impossible to assess the respective potential exposure for liability of each of the named individual Debtors, and other defendants. The Plaintiff Tort Claimants are seeking damages against the defendants in an amount exceeding $400,000,000. In addition to the 91 Plaintiff Tort Claimants, there are hundreds of other claimants which assert similar claims, which are referred to collectively as the "Non-Plaintiff Tort Claimants." Over 500 proofs of claim have been filed asserting claims similar to those raised by the Plaintiff Tort Claimants.

The fees and costs to pursue litigation respecting over 500 Tort Claims has been evaluated by professionals retained by the Debtors for this and other purposes. Such professionals project that the cost of such litigation based on certain assumptions respecting the litigation, which will be presented to the Court at the hearing on confirmation, is over $29 million. The Debtors assert that such costs would exhaust any and all funds available for distribution to Claimants. One of the primary purposes of the Plans is to establish procedures to reduce the litigation costs and to provide a source of revenue to fund such expenses separate from the proceeds made available to Tort Claimants.

ISKCON Chapter 11 Reorganization Plan and Ballot Voting
Chapter 11 allows a debtor, and under some circumstances, creditors and others parties in interest, to propose a plan of reorganization. The plan may provide for the debtor to reorganize by continuing to operate, to liquidate by selling assets of the estate, or a combination of both. Each of the California Debtors and the West Virginia Debtors are proposing Plans of Reorganization.

The Debtors Plans are reorganizing rather than liquidating plans. By and through each of the Debtors Plans, the Debtors will resolve all claims against each of their estates, including any and all Tort Claims, in a streamlined and cost effective manner that will provide for the largest distribution possible to Allowed Claimants.

Plan distributions shall be funded from various sources, which include donations from members and supporters of ISKCON, revenue derived from each Debtors religious and other operations, contributions from other non-debtor ISKCON entities, and Insurance Proceeds. Tort Claimants will also be eligible for additional distributions from a trust set up to provide a distribution to those Tort Claimants providing releases to certain parties other than the Debtors. The Effective Date of the proposed Plans is defined in the Plans as a date to be set by Debtors, which date shall be within ten (10) business days after the Confirmation Order becomes a Final Order.

The Iskcon Chapter 11 Reorganization Plan seeks to discharge and satisfy creditors Claims4/ by providing for payments under the Plan and to continue in existence and in possession of their property. The source of payments under this Plan will be donations, revenue from religious and related activities, contributions by third parties and insurance proceeds, if any, recovered from various insurance carriers in connection with Tort Claims. By and through the Plans, the Plan Proponents propose to resolve all claims against the West Virginia Debtors estates, including all Tort Claims, in a streamlined and cost effective manner that will provide for the largest distribution possible to Holders of Allowed Claims. As described more fully below, the Plans provide for the resolution and treatment of all Tort Claims through common trusts established jointly with the California Debtors.

The bankruptcy lawyers have provided a seven page Release to all claimants. That Release contains a list of the Debtors and those legal entities and persons who contributed to the compensation fund. No known perpetrators are included in the Release.

California Debtors and Debtors-in-Possession
(1) International Society for Krishna Consciousness of California, Inc. ("ISKCON CA"); (2) ISKCON Television, Inc., a California corporation, aka ITV Productions, Inc. ("ITV"); (3) Bhaktivedanta Book Trust International, Inc., a California corporation ("BBTI"); (4) International Society for Krishna Consciousness of Southern California, Inc., a California corporation, aka ISKCON of Southern California, Inc. ("ISKCON SoCal"); (5) International Society for Krishna Consciousness of Los Angeles, Inc., a California corporation, aka ISKCON of Los Angeles, Inc. ("ISKCON LA"); and (6) International Society for Krishna Consciousness of San Diego, Inc., a California corporation, aka ISKCON of San Diego, Inc. ("ISKCON San Diego," and collectively, the "California Debtors"); as well as (7) JAGA, Inc. ("JAGA"); (8) International Society for Krishna Consciousness New Mathura Vrindaban ("ISKCON NMV"); (9) NRS, Inc. ("NRS"); (10) International Society for Krishna Consciousness of West Virginia, Inc. ("ISKCON WV"); (11) New Vrindaban Community, Incorporated ("NVC"); and (12) Cathedral of Healing, Inc. ("COH, INC." and collectively, the "West Virginia Debtors").

"ISKCON CA" [of California, Inc.]
"ITV" [ISKCON Television/ Production Inc.]
"BBTI" [of California, Inc
"ISKCON SoCal." [of Southern California, Inc.]
"ISKCON LA" [of Los Angeles, Inc.]
"ISKCON San Diego"

"JAGA" [JAGA, Inc.]
"ISKCON NMV" [of New Mathura Vrindaban]
"NRS, Inc." [New Vrindavans real estate holding company.]
"ISKCON WV" [of West Virginia, Inc.]
"NVC" [New Vrindaban Community, Inc.]
"COH" [Cathedral of Healing, Inc.]

Non-Debtor Defendants:
Those non-debtor entities or Persons that are named defendants in the Court Actions, including the International Society for Krishna Consciousness, Texas Krishnas, Inc., ISKCON Foundation, Inc., International Society for Krishna Consciousness of Washington, Damodar Title Holding Corporation of Dallas, Inc., ISKCON, Inc., ISKCON Krishnafest USA, Inc., ISKCON of Lake Huntington Property Corporation, ISKCON of Port Royal, Inc., Gregory Gottfried [Gurukripa Swami], Robert Grant [Ramesvara Swami], Thomas Herzig [Tamal Krishna Goswami], Gopal Khanna [Gopal Krishna Goswami], Howard Resnick [Hridayananda das Goswami] and Glen Teton [Giriraj Swami],

as Executors of the Estate of A. C. Bhaktivedanta Swami Prabhapada, Faramarz Attar[Atreya Risi das], Charles Bacis [Bhavananda Goswami], William Berke [Bali Mardan das], Robert Corens [Rupanuga das], William Deadwyler [Ravindra Svarupa das], III, William Ehlichman [Bhagavan dasa Adhikari], John Favors [Bhakti Tirtha Swami], Steven Gorego a/k/a Steven Guarino [Satsvarupa dasa Gosvami], Michael Grant [Mukunda Goswami], Keith Ham [Kirtanananda Swami], Theodore Richard Harris [Panca Dravida Swami], Thomas Herzig [Tamal Krishna Goswami], Jeffrey Hickey [Jagadish das], Hans Kary [Hansadutta Swami], Gopal Khanna [Gopal Krishna Goswami], William Ogle [Balavanta das], Howard Resnick [Hridayananda das Goswami], Bruce Scharf [Brahmananda das], Bruce Jacobs [Bir Krishna das Goswami], and John Patane [Ramai Swami].

ISKCON Chapter 11 Disclosure Statement Approved
On February 11, 2005, ISKCON's Chapter 11 Disclosure Statement was formally approved by the U.S. Bankruptcy Court. The Disclosure Statement contains the legal, financial and organizational assumptions which are used to create the Reorganization Plan.

This milestone legal event clears the way for the Reorganization Plan to be put to a vote by all of the claimants. Voting ballots are scheduled to be mailed out to all claimants on February 28, 2005.

All claimants in the ISKCON Chapter 11 case were recently mailed a voting packet which contains a CD, ballot and release form. To vote on the Reorganization Plan, a ballot needs to be filled out and returned in the enclosed envelope by April 29, 2005, after which all of the votes will be tallied and reported to the court.

Should that vote result in approval and confirmation of the Plan, disbursement of financial compensation would then follow. Compensation can only be paid to those who have a valid Proof of Claim on file with the court.

Once the voting process is completed, the case should then move quite swiftly towards Plan confirmation, in May of 2005. Assuming the Reorganization Plan is confirmed and approved, initial compensation payments would then start, perhaps as early as September of 2005.

Gurukula alumni begrudgingly vote for reorganization plan
by Krsna Avatara das
Posted May 6, 2005

The article entitled "Gurukulis overwhelmingly approve ISKCON Chapter 11 reorganization plan" is inaccurate and misleading for several reasons: The term "gurukuli" as used by the first-generation devotees is a pejorative term. Gurukulis are people attending gurukulas, not those who have attended them. This would be synonymous to stating that because one attended college twenty years ago, one is a college student. Usually when that term is used by first-generation devotees, it is not a positive referral. I think that sometimes first-generation devotees forget how young they were when they assumed leadership positions. A more appropriate term would be gurukula alumni or second-generation devotees. Everybody on the lawsuit is an adult, and would like to be referred to as such.

More importantly, the alumni did not "overwhelmingly approve" the reorganization plans. Having talked to a wide swath of alumni, the consensus seems to be that this plan is derisory. Many alumni believed that this plan would have a positive impact on their life, affording them the opportunity to put a down payment on a home or to help pay for their children's college expenses. What they did not expect was to be compensated for the abuse and suffering endured with what is the equivalent of gas money. Also, the fact that it is dispersed over a six-year period, with the bulk of the compensation occurring in 2011, neglects to adequately compensate alumni for inflation and time value of money factors, compounding the dissatisfaction.

Most alumni that I have talked to are accepting this because they feel they have no other choice. Many feel that ISKCON is using this Chapter 11 as a means of reorganizing its finances, with compensation to alumni as a secondary goal. Others just want to get it over with. But the title to Gupta prabhu's article is similar to the propaganda that Pravda, the newspaper that published the party line for the old Soviet Union, used to produce. I am not saying that Gupta prabhu purposely misrepresented how second-generation devotees feel; nonetheless, the title is misleading. A more apt title would be: "Gurukula alumni begrudgingly vote for reorganization plan."

Finally, most alumni don't understand why the people who caused the abuse are still initiating gurus in ISKCON. It seems counterproductive to the healing that the leaders claim to want to facilitate. The alumni still have not been given a good answer as to why the GBC choose an abusing guru over the people he abused. This decision, we feel, reflects the true values of the leaders. Most alumni are interested in moving on, leading productive lives and granting forgiveness, but the leaders of ISKCON make it very difficult.

Iskcon Managers: their names, position, salary, wages
according to the chapter 11 bankruptcy disclosure statement

Please send in the devotee names of the following persons to:
pada1008@aol.com