Hi all...
Back from a long day at court and of course, you already know the outcome...but I will add a few details here and then, and of course, answer questions. I will say before I post, that these are my notes of the hearing, and as ten of us at lunch discovered, without listening to the audio, we took away different understandings on some issues...
Prior to the hearing, an attorney for the noteholders commented on how "we" are costing the estate 1 million each day...so grumblings already on how the EC and the shareholders were a waste of time and money.
The first interesting thing to me was how the tone had changed from previous hearings. Almost to a person, each party agreed to an examiner; only the scope and timing were issues. However, when the attorney for Quinn Emanuel stood up and addressed the issue and conceded the point, it was the first indication to me that today would be a bit different. He then went on to remark that the Debtors had looked at both JPM and the FDIC's role in this and they would be happy to make numerous documents available, from "the cooperation we've been able to muscle out of JPM". Again, a subtle shift in strategy. In an attempt to set the stage for upcoming arguments, he also said, "the EC believes that the business tort claims are very valuable. More than they are" and alluded to us pursuing a "scorched earth litigation".
When Nelson spoke, he was calm and sure of himself. He asked to approach the bench on an off the record matter. Then pointed out that they had not heard from the Debtors in a week, despite the court's admonition to work cooperatively. He pointed out that despite everyone claiming that this had been investigated completely, in fact, the Debtors had not reviewed any of the legacy documents. He referenced 30 Billion as the number that they believe is the value of the estate.
Califano, from the FDIC was the ass today. He tried on a legal basis to throw the examiner motion under the bus, then resorted to calling us "out of the money constituents" and referred to us as an angry group who are out of the money and just want to rewind this. Jerk. He did not look happy today at all!
Steve Levine, the trust preferreds attorney, reminded the court that "it is incumbent upon you the court to be very clear" and shut down the wiggle room that the Debtors and JPM have enjoyed.
Wells Fargo Bank was the first to bring up the issue of the shareholders meeting request, and argued against it strenuously.
McMahon was brilliant. He said that the entire purpose of the examiner is to protect Nelson and his constituents. He brought up three key points: 1. Does the examiner play a role in determining if the settlement is fair? NO. 2. The timing and 3. The parallel track issue, which he opposed.
Nelson and Califano again, Nelson agreeing that time is of the essence and Califano falling back on FIRREA as the reason not to allow.
Finally, the judge put a stop to the nonsense and said, I have heard enough. There were three issues I used previously to base my ruling on, and I now find I was misled. Thee have been too many delays, and the process has not worked. Not concerned just with a global settlement, but with the real value of the assets. So, I am going to appoint an examiner to look at what went on behind the scenes (ie collusion or bad business decisions).
We had a short break, and McMahon asked to address the court on procedural issues surrounding the appointment of the examiner...
and that's all she wrote!
Ilene
