SG's memorandum to WAMU SHAREHOLDERS.
Or decoding SG’s wonderful billing statement.
All that follows is MHO of course, and as always, I welcome the refuting of my reasoning:
1. SG’s recent memorandum to equity (that’s right; the one to you and me) concerning the present status of the case.
This past weekend I decided to put down my copy of Clive Cussler’s latest thriller and wade instead through a different one of sorts; SG’s new billing statement. After a cursory perusal of its content I found myself to be a tad jealous of the very professional way in which the firm has kept our EC member abreast of so many critical developments in the case: telephonic conferences; meetings; even detailed memoranda concerning settlement discussions, discovery proceedings and potential conflicts of interest with the ever-lurking-yet-always-present “trial team”; right down to the drafting of the minutes of the EC’s meetings … and all in the course of a scant 30 days. But after a more careful reading of the document, I came away absolutely convinced that it’s also A MEMORANDUM OF SORTS TO EQUITY, in that it contains valuable information for those of us who have carefully followed the case, especially over the preceding 6 month period, and it filled-in some big blanks that have been around for quite a while.
2. “Fraud” and “Malpractice” … wow, it just got personal:
As a roadmap of things to come, the billing statement is as breathtaking in its scope as it is bare-knuckled in its many implicit warnings. SG has let it be publicly (and masterfully) known that they’re going after each of the co-conspirators with an array of weapons: JPMC, ala “business tort claims” and an “antitrust” action; A&M, ala “malpractice”, and that atomic bomb called “fraud” is being readied for the BOD (and even WGM?). Moreover, and just as ominously, it’s preparing to threaten livelihoods, destroy reputations and even endanger the freedom of certain individuals. It doesn’t get more personal than that! There’s the sharp smell of animous wafting within the four corners of the document, and you can bet that Rosen, WGM, JPMC, BOD, and A&M all detect it as such. I for one never bought into the initial hype about Sussman being a lawyer that other lawyers “feared” (remember his very first congenial words to Rosen … “my brethren at the bar”?). But after now seeing the lengths to which he and his colleagues are prepared to go – maybe even WANT to go - in order to notch a victory; well, the guy is absolutely scary … and certainly someone to fear.
3. Solomon has suited up; he’s on the field.
The billing statement repeatedly and thoroughly answered a question I’ve had since April … where is Solomon, and what is he doing, and when will what he’s doing be put in some presentable form such that we can go on the offensive with it? Well, we now conclusively know that he has provided SG with a presentation for use in “upcoming negotiations with debtors” (i.e., settlement), and it’s been incorporated into an Excel worksheet for that specific purpose. In other words, WE NOW HAVE (AS OF JUNE) SOME NUMBERS THAT ARE SO TRUSTWORTHY THAT THEY CAN, WITH GREAT CONFIDENCE, BE FREELY “PRESENTED” TO OUR ADVERSARIES FOR THE PURPOSE OF SETTLEMENT “NEGOTIATIONS”. And, evidently, there are so MANY numbers (i.e., ‘assets’) in the “presentation” that they are better displayed and examined within the framework of an Excel SPREADSHEET! “We don’t need no stinking 3.1a asset list”.
4. A>L!!!!!!!! Rosen’s DS/POR v5 is a wrecked hulk.
On June 17th Sargent has a one hour and twenty minute telephonic meeting with the debtors and WGM re “solvency analysis”. And that same day he has a 50 minute telephonic meeting with “EC professionals” (i.e., Solomon) re “implications of solvency analysis” (i.e., Rosen’s POR is toast). And on June 22nd Sargent has a one hour telephonic conference with the trial team re “solvency analysis AND INTENTIONAL FRAUD ISSUES” (bold caps mine – A&M is toast). And that same day he spends almost two hours “researching claims for auditor (i.e., A&M) malpractice under NY law. A&M’S “INSOLVENCY ANALYSIS” (their phrasing) IS SO HOPELESSLY AT ODDS WITH SOLOMON’S “SOLVENCY ANALYSIS” (his phrasing) THAT IT IMMEDIATELY RAISES ISSUES OF MALPRACTICE (AND EVEN FRAUD), WAY BACK IN JUNE!!!!!
5. “Settlement”. This time it’s real, and it’s not the ‘lowball’ that many have assumed.
We all still bear the psychic scars of Rosen’s now infamous “Global Settlement” and how we erroneously assumed that we were a part of that phrase. So much so that we didn’t take the bait in as great numbers when he subsequently enticed us with his “fruits of the negotiations” ploy. Nor were we moved at all by a meet and confer that was supposed to address discovery?, or was it settlement?, or was it settlement of discovery issues?. No. We weren’t moved at all by that.
SG’s billing statement takes all that heartache and confusion into account by being absolutely clear on the issue of “settlement” vs. “discovery”. It repeatedly talks about “discovery” and settlement” being two completely different and distinct facets of the proceedings:
Sargent on June 15th: attending a 30-minutes phone conference with counsel for debtors re “possible settlement”. And Nelson on June 15th: “Conferring with opposing counsel RE discovery and settlement” and then “conferring with trial team and client re same (i.e., discovery and settlement). On June 16th he attends the meet and confer with the debtors and the discussion is only about discovery procedures (no mention of settlement). And on that same day he has an actual meeting (not telephonic) with the EC to discuss “possible settlement” (no mention of discovery procedures). And on that same day, Sargent has a 30 minute telephonic meeting with the EC about “potential settlement” as well (again, no mention of discovery procedures). And on that same day Sargent has an actual 1 hour and 20 minute in-person meeting with the EC re “possible settlement”. On June 18th Sargent and Nelson confer on “status of settlement talks” (no mention of discovery). And on June 21st Sargent confers with P. Folse re “discovery issues and settlement”. And on June 29, Sargent spends 45 minutes with “representatives of the Debtors discussing confidential settlement analysis” (no mention of discovery).
Clearly then, SETTLEMENT was being earnestly discussed as far back as June. If equity was only “thrown a bone” at that time (as many seem to believe), then why the need to keep discussing that bone? Why have both telephonic and in-person meetings to discuss a bone? Why have two partners (Nelson and Sargent) both contact the EC (one in person), on the same day, to discuss a bone? And why throw merely a bone to busy professionals who have taken the time and incurred the expense to buttress their positions with an Excel asset “presentation” crafted by Solomon? Why would such professionals even relegate and demean themselves and their asset “presentation” as someone and some thing only deserving of a bone? And why end a month of being thrown only a bone, by spending 45 minutes with “representatives of the Debtors discussing confidential settlement analysis”. Why all the back-and-forth over a bone? Why not simply defer all further discussions on the matter until the debtor was willing to make an offer that approached the realm of reasonableness?
Why? Because the offer of settlement is rising to that realm of reasonableness; hence the need to keep in almost constant contact with the EC. The offer is changing. It’s increasing. And it’s begun to interest the EC. And it’s even MORE REASONABLE now, almost 60 days later. And that’s what SG wants us all to know! As a side note, it’s weird and certainly disgusting that ALL of the settlement negotiations are took place between SG and either the debtors or the debtors counsel, as opposed to JPMC and/or the FDIC. This just underscores how conniving that alliance was/is.
6. Conclusion. A very merry Christmas is on the way.
So … I stand by my posting of some two weeks ago. This case ends with a settlement (a real good one) in the latter part of September. The parties will have had the benefit of 4 months of earnest negotiations. It will prove to have been more than enough time to successfully wrap things up. The settlement will be announced at the October 7th hearing, where the hopelessly wrecked DS/POR v5 will be swiftly withdrawn. Nothing of any import will transpire at the September 7th hearing. SG doesn’t need the examiner anymore, as the finish line is now clearly in sight. A DS/POR v6, containing the terms of the settlement will be filed and racked for a confirmation hearing in late November, and all classes will be paid by Christmas. We are – ALL of us – absolutely GOLDEN!
Postscript: The only aspect of the proceedings that the billing statement failed to address was the nature of the sealed document that turned the case on its head. Clearly, such a devastating document would have found its way to SG’s “hot document binder” in either June or early July (well before the threat of an examiner actually entering the proceedings). As WGM, Quinn and JPMC each have their own “hot document binder”, it’s not possible to speculate as from which particular binder the sealed document might have been pulled. However, the odd behavior of both Rosen and the Quinn attorney upon exiting the in-chambers hearing in July would lead one to believe that the document in question came from either the WGM or the Quinn “hot documents binder” and not that of JPMC Interestly, up until June, there was no FDIC “hot documents binder”. Still stonewalling I guess.
The whole thing nevertheless remains a great mystery … one that will probably forever go unsolved.
