Mr Cooper Group Inc (COOP)

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Very important WaMu history with links - How we got here

Insider Trading AGAINST HEDGE-FUNDS- Capital Management LP, Centerbridge Partners LP, Appaloosa Management LP and Owl Creek Asset Management

https://www.bloomberg.com/news/articles/2012-01-25/wamu-bankruptcy-judge-agrees-to-drop-insider-trading-ruling-1-

Very Juicy Material from the “Texas Litigation” involving the illegal seizure of WaMu

http://www.kccllc.net/documents/0812229/0812229090501000000000002.pdf


http://www.bloomberg.com/news/2012-01-25/wamu-bankruptcy-judge-agrees-to-drop-insider-trading-ruling-1-.html

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WaMu bankruptcy Judge Agrees to Drop Insider-Trading Ruling
By Steven Church Jan 25, 2012 12:33 PM ET
The judge overseeing Washington Mutual Inc. (WM)’s bankruptcy agreed to drop a ruling that hedge funds may have engaged in insider trading.
U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, found in September that there was enough evidence of insider trading to allow a lawsuit to be filed against four hedge funds that hold billions of dollars of WaMu’s debt.
Walrath agreed today to certify to a higher court that she probably will vacate (YOU DON’T SAY) that order, which is on appeal. The certification would allow Walrath to drop the ruling if she approves WaMu’s $7 billion reorganization plan at a hearing scheduled for next month. Striking part of the insider-trading order will “pave the way for the debtors to finally exit bankruptcy after three years of extensive litigation and negotiation with a multitude of interested parties,” WaMu said in court papers.
WaMu is preparing to try for the third time to win approval of its plan after settling the objections of critics including shareholders. The Seattle-based company filed for bankruptcy on Sept. 26, 2008, the day after its banking unit was taken over by regulators and sold to JPMorgan (JPM) Chase & Co. for $1.9 billion.
Creditors Rejected Walrath today rejected the arguments of a group of creditors that oppose WaMu’s reorganization plan. The group claimed that Walrath would set a bad precedent by vacating her ruling ( YOU DON’T SAY)and that the four hedge funds were trying to restore their reputations after being accused of insider trading. The hedge funds “are pursuing this so they can go out as part of their business model and say, ‘Look, the judge supported our position,’” Howard J. Kaplan, a lawyer for creditors, told Walrath at the hearing. Shareholders had accused Aurelius Capital Management LP, Centerbridge Partners LP, Appaloosa Management LP and Owl Creek Asset Management LP of receiving inside information and using it to trade on WaMu securities. The four funds denied the allegations and supported vacating the order.

From http://usatoday30.usatoday.com/money/industries/banking/story/2012-02-17/washington-mutual-reorganization-plan/53133432/1

In approving Washington Mutual's plan, Walrath agreed to strike language in her September ruling that referred to the insider trading allegations against the hedge funds, a condition the hedge funds had demanded in the December settlement that paved the way for the plan.

Distressed Claims Trading: Insider Trading May Lead to Disallowance of Bankruptcy Claims and Breach of Fiduciary Duties
By Paul J. Ricotta

In a significant expansion of the potential risk for distressed claims traders, the Delaware bankruptcy court has recently ruled that traders who engage in insider trading may have their claims subordinated to equity, and that traders who amass claims sufficient to block a plan of reorganization owe fiduciary duties to all other creditors and shareholders during plan negotiations.

Washington Mutual, Inc., a bank holding company that formerly owned Washington Mutual Bank (“WaMu”), was once the nation’s largest savings and loan association, having over 2,200 branches and holding $188.3 billion in deposits. When WaMu filed for bankruptcy protection in September, 2008, disputes immediately arose among a number of parties regarding the ownership of certain assets and various claims that the parties asserted against each other. After more than a year of negotiations, a settlement was reached among some, but not all of the parties (the “Settlers”), and was incorporated into a proposed plan of reorganization that offered to pay creditors but would leave nothing for shareholders. The non-settling parties, including the Debtor’s Equity Committee (“Equity”), sought, among other things, to equitably subordinate the Settlers’ claims on account of alleged insider trading and to hold the Settlers liable as “temporary insiders” for breach of fiduciary duty because the Settlers held claims that were sufficient to block confirmation of any other plan.

Equitable Subordination
Equity claimed that, during the course of the settlement discussions which ultimately lead to the proposed plan of reorganization, the Settlers obtained material, non-public information about WaMu and traded in its securities. They further claimed that the Settlers maintained a blocking position which would prevent the confirmation of any plan that did not have the support of the Settlers. By virtue of their leverage, the Settlers then “dominated” plan negotiations to assure that their settled claims would be paid while nothing was given to WaMu’s equity.

Based on these facts, Equity sought to equitably subordinate the claims of the Settlers despite the fact that other courts have held that the Bankruptcy Code does not authorize the disallowance of a claim on purely equitable grounds. Notwithstanding prior case law, the Delaware bankruptcy court held that it had the power to equitably subordinate claims if they were subject to a defense outside of bankruptcy (in this case, a securities law violation).

A securities law violation can be established if a corporate insider trades in the securities of his corporation on the basis of material, non-public information. The court found a colorable claim for liability because the Settlers traded in WaMu’s securities with knowledge that a settlement was being discussed, including the relative stances the parties were taking in those negotiations over the course of the discussions, and with knowledge of the settlement term sheets exchanged by the parties, all at a time when the public knew only that WaMu and its creditors were engaged in contentious litigation.
The court found no merit in the Settlers’ arguments that Equity was simply utilizing 20/20 hindsight based on the fact that a settlement had ultimately been agreed upon or that, until a deal in principle is reached, mere negotiations do not constitute material, non-public information. The court noted that, as the negotiations progressed, it became clear to the parties involved — but not the public — that a settlement was becoming more probable and that the funds available to the bankruptcy estate were increasing. The court also dismissed the Settlers’ argument that the fact that some Settlers bought claims, some sold, and some did neither, demonstrated that the information gleaned during the negotiations was not material, because unwise or contrary trading does not provide a defense to a securities law violation.

Breach of Fiduciary Duty
Equity also contended that the Settlers became “temporary insiders,” which include those who have entered into a special, confidential relationship in the conduct of the business of the enterprise and are given access to confidential information solely for corporate purposes. Equity asserted that the Settlers became temporary insiders when they were given access to the settlement term sheets and participated in confidential settlement discussions. As insiders, the Settlers owed a fiduciary duty to act for the benefit of all creditors and shareholders, which was breached when they supported a plan that paid nothing to the shareholders. The Delaware bankruptcy court agreed with Equity, deeming the Settlers temporary insiders, and ruling that they owed fiduciary duties to all other creditors and shareholders because they held blocking positions in two classes of WaMu’s debt structure. The court authorized Equity to commence litigation against the Settlers for breach of that fiduciary duty.

Lessons Learned
Washington Mutual teaches at least two valuable lessons for distressed claims traders. First, claims traders who wish to be active participants in bankruptcy proceedings, especially in connection with negotiating a plan of reorganization, should either avoid any trading during negotiations or should be especially careful to erect a state-of-the-art ethical wall to prevent traders from obtaining any information whatsoever from the bankruptcy participants. Second, by acquiring sufficient amounts of debt to control the vote under a plan of reorganization, traders may be taking on fiduciary duties during negotiations to act in the best interests of all other creditors and shareholders.
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Between Aug/2009 and Dec/2009 the key players were Weil/Gotschal/Manges, Quinn Emanuel, JPM, SNHs and some other players and most people still thought Rosie was working for the WaMu Estate. So when the SNHs finally realized Rosie was REALLY working for JPM/US Government all hell started to break loose with the SNHs and Quinn Emanuel.

There was an 800 to 900 page filing that I called the "BOMB" because when this was dropped/filed in Dec/2009, it contained Sheila Bair's personal phone number to Jamie Dimon, emails from many of the key Executives with JPM discussing many illegal details. AT&T had WaMu Executive offices wired (highly illegal) illegally (not illegal for AT&T) to monitor what the Executives were actually planning. This filing was around the same time frame as Joe McMahon made his infamous "Exigent Circumstances" filing with the court for an EC which was Dec/2009. So, the bottom line is they almost destroyed each other before we really knew that Rosie had totally sold out the Estate and equity. Rosie's real problem was there was just way too many billions of dollars to hide in cash and assets.


Download the document listing for yourself here, click on Excel Download.
http://www.kccllc.net/wamu/document/list/3853

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A few months before this Dec/2009 filing, the SNHs and Quinn Emanuel found out Rosie was working for JPM and going to gift ALMOST everything to them leaving the SNHs high and dry. This did not bode well so a HUGE fight before Susman/Equity got involved created the shoot-out in the OK Corral was on almost blowing this up into the world-wide media. With this "BOMB" of a filing which contained enough details to bankrupt JPM, then JPM followed with a filing of insider trading against the SNHs. This is the FIRST time insider trading was brought to the surface and then quieted which was around Dec/2009. This had NOTHING to do with Nate Thoma at this time.

So quickly moving on, what do they do when they are caught and about ready to expose each other to the world along with their crimes-yes, they make a deal and that is what happened. The SNHs carved up what they wanted with JPM/Rosie in a truce to make a deal and share the stolen "Enterprise" so on March 11, 2010 ) again, before Susman/Equity involvement) the four year term sheet was signed and then the infamous rant from Rosie on March 12, 2010 discussing his POR and no money for equity. But at this time the SNHs were going to get a whole lot but it was all disguised to be at the end of the case hence, the four year term sheet that came due March 2014. They still had planned to extinguish equity in total but as we know Susman who was just getting a foot hold in early 2010 was to change the entire receiving end of the Matrix payout which capped the Piers and left equity to receive what the SNHs were planning on stealing.

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Escrow Share Account Owners - Discussion on Asset Sales/Transfers

The following is from (Co-written) Weasel/Gotcha/Mangle - Imagine that! Ensure you pick on the "melting ice-cube theory. Also registry accounts on pages 50/51

http://www.law.harvard.edu/programs/olin_center/papers/pdf/Roe_645.pdf

http://materials.abi.org/sites/default/files/2013/Sep/363SalesTopics.pdf

This is a great read about Rule 363 being used recently. Look at pages two to five discussing 'vanishing sub rosa plan doctrine' plus how 363 plan sales are used to funnel asset sales while a shell company goes through chapter 11.

http://www.wlrk.com/webdocs/wlrknew/AttorneyPubs/WLRK.17844.10.pdf

This is a super refresher of what happened. Also term sheet that was finalized on 5/2010 and 363 sale placed in Treasury Bonds

http://www.scribd.com/doc/63319846/Washington-Mutual-WMI-Closing-Argument-of-the-Equity-Committee-1st-Confirmation-Hearing-in-December-2010

The following is about Chrysler and how a 363 sale can be violated and to bring in someone from the outside such (example) as JPM.

http://www.law.harvard.edu/programs/olin_center/papers/pdf/Roe_645.pdf