Study break and I'm back on for a few minutes, lol.
I actually approached one of the more senior attorneys at my firm whose practice involves bankruptcy, creditors rights and complex commercial litigation with this question and even he couldn't give me a straight answer on the issue.
What we do know is that Judge Walrath clearly stated she would not accept any amendments to the DS/POR until the examiner completes his investigation. I don't have a transcript of the proceedings so I can't confirm whether she stated that she would accept a proposed resolution.
If Judge Walrath is firm on not accepting a new amended DS/POR until completion of the examiner's investigation, then her position might create a major paradox because a new settlement would serve as a prerequisite for an amended DS/POR - even if the settlement and subsequent amendments to the DS/POR are favorable to equity. Accordingly, if she won't allow the amendments to proceed then WMI/FDIC/JPM have no incentive to settle during the investigation because the examiner would still obey the court and continue his examination anyway. On the other hand, the bottom-line purpose for the appointment of an examiner in this case is really to protect equity's interests. Accordingly, if those interests are adequately represented in a new global settlement agreed upon by all parties, then in theory there is no reason for the court to employ an examiner to protect equity's interests since they would already be protected by the new settlement.
That's the dilemma that I see with procrastinating until the examiner begins his investigation. I don't see how reasonable business judgment could justify them reluctantly giving an examiner access to documents when the examiner clearly knows what he is looking for, how to find it and what he is trying to prove. In the end, it will be a tremendous risk that may potentially create an exponential amount of exposure in the $100+ billion range when they could presently engage in a mutually equitable settlement in the $30-56 billion range. It just doesn't add up to me. As shrewd as Dimon is and as daring as Bair might be, I don't believe that either of them made it this far in their respective careers by substituting arrogance and hubris for common sense and rational business judgment.
There are two more quick points that I'd like to make in reference to your post before I get back to the books: (1.) absent any contrary information, knowledge, or clarification of the above-referenced paradox and amiguity from Judge Walrath, our adversaries would assume a major risk by daring to move for a settlement during the examination when it's not even clear that Judge Walrath will sign off on one without completion of the investigation; and (2.) even if they do proceed with the investigation, once the examiner comes across a hint of evidence pointing to fraudulent or illegal activity, he will inform the Department of Justice and criminal investigations will begin - even if the parties settle and the examiner's investigation ends.
That's all folks. Back to outlining. I have a monster Remedies exam to take on Thursday and I intend on destroying it. In the interim, I will sleep well knowing Judge Walrath has yet to sign off on the U.S. Trustee's Application.
