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Notice of Second Proposed Distribution Filed by Joel I. Sher (11/29/23)
Trustee will make a second distribution of in the aggregate amount of $2,000,000. Deutsche Bank Trust Companies American will receive $1,990,620.56 for Class 2A Senior Noteholders.
This is equal to about $6.7745 per $1,000 principal amount.
Source: Epiq [Docket 3604]
IBKR keeps telling me it's interest when I challenge them!
"Thank you for contacting IBKR Client Services.
Kindly note that we believe that the interest payment is correct per our 3rd party tax source, if you have a copy of the 8937 from the corporate action showing that this should be taxed as long term capital gains, please have a copy attached so our back office can review this item."
How did you get this remedied to be long-term capital gains?
I would not expect any good news going forward.
And the real amount was... $252.04 per $1,000 in principal amount.
Check with your transaction history regarding treatment by your broker. IBKR treated it as an interest payment!
Senior Note symbol was replaced with CUSIP this week.
Distribution should occur next week.
The Initial Distribution to Class 2A Senior Noteholders will be $74,058,888.62.
Deutsche Bank Trust Company Americas filed a Claim in the amount of $304,742,654.67, which included $10,904,654.67 in Pre-Petition intertest.
Based on the information detailed above, the initial distribution should be about $252.04 per $1,000 in principal amount.
Notice of Proposed Distribution Filed by Joel I. Sher (11/08/22)
Objections to the Proposed Distributions must be filed with 21 days.
If no objections are timely filed, the Plan Administrator will make the first Distribution as set forth on Exhibit A.
https://document.epiq11.com/document/getdocumentsbydocket/?docketId=971623&projectCode=TMI&docketNumber=3546&source=DM
Confirmation Hearing scheduled for 10/11/2022 at 11:00.
Tally of Ballots and Voting Declaration on behalf of Joel I. Sher Filed by Joel I. Sher (10/03/22)
Class 2a Senior Noteholders: Accepts
Class 2b Senior Sub Noteholders: Rejects
Class 2c Junior Noteholders: No votes received (Class deemed to Accept)
https://document.epiq11.com/document/getdocumentsbydocket/?docketId=967529&projectCode=TMI&docketNumber=3498&source=DM
Source: Epiq Systems [Docket 3498]
Order Approving Disclosure Statement and Setting Hearing on Confirmation of Plan with Notice Thereof Amended Disclosure Statement filed by Trustee Joel I. Sher (7/29/22)
Confirmation Hearing scheduled for 10/5/2022 at 10:00 AM to take place by audio and video teleconference. Contact case trustee for hearing information.
Objection Deadline to Confirmation is 9/9/2022 at 4:00 PM.
Ballots due by 9/9/2022 at 4:00 PM.
Source: EPIQ [Docket 3363]
Disclosure Statement Regarding Trustee's Joint Chapter 11 Plan of Liquidation of TMST, Inc., et al. Filed by Joel I. Sher. (6/08/22)
https://document.epiq11.com/document/getdocumentsbydocket/?docketId=954689&projectCode=TMI&docketNumber=3243&source=DM
Hearing scheduled for 7/26/22 at 2:00.
Virtual Courtroom (for hearing access information see ww.mdb.uscourts.gov/hearings or call 410-962-2688)
Source: Epiq [Docket 3243]
Billions evaporated.
I wonder what the late Richard Rainwater would think of the final outcome.
He invested over $56 million.
https://www.sec.gov/Archives/edgar/data/892535/000095013408001058/d53310bsc13d.htm
I lost quite a bit more than this guy's 2K. Of course this will be laughed out of court, but I do admire his testicular fortitude...
https://document.epiq11.com/document/getdocumentbycode?docId=4081464&projectCode=TMI&source=DM
Order Granting Trustee's Motion for Approval of Settlement and Compromise of Controversy Between the Trustee and JPMorgan, Citigroup, Credit Suisse, and UBS Defendants - FOR THE REASONS STATED ON THE RECORD AT THE HEARING HELD ON MAY 10, 2022 (5/11/2022)
Source: PACER [Docket 701]
Settlement Approved.
New stated goal is wrapping up the case by the end of 2022.
Response on behalf of Creditors Committee Filed by Alan M. Grochal (4/25/2022)
STATEMENT OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF THORNBURG MORTGAGE, INC. (k/n/a TMST, INC.) IN SUPPORT OF TRUSTEE’S MOTION FOR APPROVAL OF SETTLEMENT AND COMPROMISE OF CONTROVERSY BETWEEN TRUSTEE AND JPMORGAN, CITIGROUP, CREDIT SUISSE AND UBS DEFENDANTS
The Official Committee of Unsecured Creditors (the “Committee”) in the abovecaptioned chapter 11 cases (the “Chapter 11 Cases”) of TMST, Inc. (f/k/a Thornburg Mortgage, Inc.) (“TMST”) and its affiliated debtors (collectively, the “Debtors”) commenced under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as amended, the “Bankruptcy Code”), hereby submits this Statement In Support Of Trustee’s Motion For Approval Of Settlement And Compromise Of Controversy Between Trustee And JPMorgan, Citigroup, Credit Suisse And UBS Defendants [Adv. Docket No. 698] (the “Settlement Motion”) and respectfully states as follows:
PRELIMINARY STATEMENT
Since the filing of the Chapter 11 Cases, the Committee has been “all in” on pursuing claims against the Counterparties. It promptly served Rule-2004 discovery on the Counterparties in 2009. On April 30, 2011, the Committee co-signed the complaint alongside the Trustee commencing this proceeding demanding redress for the conduct of “America’s largest money-center banks who used market disruption as a basis to initiate a collusive scheme to take control of the Debtors;” issued “a host of unjustified margin calls;” received nearly $2 billion under the various “override” agreements; and terminated those agreements, “liquidated their collateral, and left the Debtors to file a free-fall chapter 11 cases to address their remaining creditors.”1 To the Committee’s mind, no amount short of the payments coerced under the various “override agreements” can compensate creditors for the Counterparties’ overreaching. Given their conduct, the Committee’s expectations for a settlement are afield of the $38 million in cash and claims waivers in the existing settlement.
Yet, the Committee also understands the risks and realities of litigation, its expense, and the cost of delay. It has monitored the proceeding as best it could from the sidelines since the Counterparties’ objection to its intervention motion was sustained, including its myriad disputes, e.g., the Counterparties’ motions to dismiss, the Trustee’s motion to amend the Complaint, and the Trustee’s motions to compel the Counterparties to comply with their discovery obligations. The Committee’s diligence into the settlement has not uncovered any basis to dispute the Trustee’s exercise of his business judgment to settle the claims in the proceeding. Accordingly, the Committee supports the settlement and looks forward to the prompt conclusion of the Chapter 11 Cases.
1
Adv. Proc. ECF No. 1 (Complaint). Capitalized terms not defined herein have the meanings ascribed to them in the Complaint or the Settlement Motion.
BACKGROUND
The Committee has focused doggedly on claims against the Counterparties since its appointment on May 7, 2009. Within two weeks, on May 14, 2009, the Committee filed a motion for authority to take Rule-2004 discovery of the Counterparties.2 It also worked with the Trustee to initiate this lawsuit and signed the original Complaint in April 2011 as a purported plaintiff-intervenor. The Committee similarly moved to formally intervene as a party in the proceeding, but the Committee’s intervention motion was denied by an order dated July 7, 2011 3 after the Counterparties’ objected. Among other things, the Court was persuaded by the Counterparties’ argument that the Trustee adequately represented the Committee’s interests in prosecuting the lawsuit.
DILIGENCE OF SETTLEMENT
The Committee has conducted as much diligence of the Settlement as is
feasible with respect to a litigation that spanned more than a decade. The Trustee and the Counterparties cooperated fully and promptly with the Committee’s diligence requests, but the
2 See Chapter 11 ECF No. 109 (Rule 2004 Mot.) ¶ 29 (identifying areas for discovery:
“[t]he Debtors received considerable margin calls in 2008 and 2009 totaling billions of dollars. They also received notices of default from the Counterparties and executed an Override Agreement purportedly designed to restructure (or at least suspend) those obligations. Immediately after its execution, however, the Counterparties took actions the Debtors believed were inconsistent with the Override Agreement, and the Override Agreement was purportedly amended. Thereafter, and until these cases commenced, the Counterparties exercised their remedies in collateral totaling billions of dollars and now assert billions of dollars in deficiency claims. All the while, the Debtors suffered from liquidity constraints, which were exacerbated by the Counterparties’ actions. Therefore, the facts and circumstances surrounding the Securities Contracts, the Override Agreement, the Amended Override Agreement, the Forbearance Agreements, the Counterparties’ alleged exercises of remedies, collateral seizures, and the Counterparties’ deficiency claims are important areas for discovery. Similarly, the involvement of certain insiders, including MatlinPatterson, in these transactions, should be examined”); Chapter 11 ECF No. 164 (Order granting Rule 2004 Mot.).
3 Adv. Proc. ECF No. 21.
record in the proceeding requires a certain amount of archeology. The parties produced more than a million pages of documents. And, while the Committee has canvassed the record, it would take months if not longer to understand it as intimately as the parties. That said, the Committee has been given access to sufficient information to reach an informed decision whether to support the settlement.
The Committee’s settlement diligence started by gathering an understanding of the extent of the Trustee’s activities in prosecuting the lawsuit. The Committee requested (a) all document requests, to gain an understanding of the categories and topics the Trustee pursued; (b) all interrogatories and responses; and (c) all deposition transcripts. It also asked for the ability to review certain categories of documents, e.g., the Counterparties’ records regarding the close-out of their positions and documents the Trustee considered particularly significant. The Trustee and the Counterparties agreed to provide access to those documents after Committee counsel executed the Stipulated Protective Order Governing Production and Exchange of Confidential Information.4
The Trustee’s counsel also provided Committee counsel with, among other things, access to the following documents: (1) all key agreements (Override Agreement, Amended Override Agreement, Security Agreements, Account Control Agreements, Forbearance Agreements and legal opinions); (2) all deposition transcripts (which total 15 and include corporate designees from each of the four remaining defendants); (3) discovery responses by both the Trustee and each of the Counterparties; (4) documents produced by all parties; (5) deposition exhibits; (6) proofs of claim filed by each of the Counterparties; (7) selected pleadings the Trustee considers most relevant; (8) and a sampling of various documents
the Trustee believed were especially relevant to the Committee’s assessment of the settlement.
4 See Adv. Proc. ECF Not. 147.
In total, the Trustee (and Counterparties) provided Committee counsel with close to 500 documents comprising thousands of pages.
The Trustee and his counsel also made a presentation to the Committee on April 6, met with counsel for the Committee to coordinate diligence on April 8, and sat for an extensive interview on April 21. Additionally, the Trustee and his counsel responded to various informal information requests from Committee counsel.
CONCLUSION
The Committee’s support for the settlement is a function of its institutional understanding of the claims against the Counterparties as well as its review of the record adduced. That includes an examination of various agreements, e.g., the different override and related collateral agreements; emails and other documents; deposition transcripts; and meetings with the Trustee and his counsel.
Moreover, the Committee appreciates the applicable standard and the relatively low legal hurdle the settlement must clear. It has no interest at this point in the Chapter 11 Cases of needlessly devouring time and resources debating the Counterparties’ conduct within the context of the Settlement Motion.
The Committee will never be convinced the Counterparties acted
appropriately. For that reason, cash consideration significantly below the amounts demanded in the Complaint does not square with the Committee’s expectations. But, the Trustee and his counsel both were highly incentivized to recover as much cash from the lawsuit as possible given their contingent-fee arrangements. A larger cash recovery would afford them a larger share of the proceeds. That the Trustee is willing to accept the settlement after more than 10 years and extensive discovery given his compensation structure is a significant data point.
What is more, the settlement includes a waiver of $1.75 billion in supposed deficiency claims filed by the Counterparties. The Committee would not have supported any settlement that allowed those claims or otherwise resulted in the Counterparties getting a distribution of estate assets. The Trustee’s counsel provided Committee counsel with considerable detail with respect to the estates’ efforts to analyze the alleged deficiency claims. Vetting challenges to those claims necessarily was a significant project for the Trustee given their size and the various types of collateral involved. The Trustee’s settlement eliminates any litigation risk associated with objecting to those claims by securing the Counterparties’ agreement to a complete claims waiver.
Finally, the settlement clears the path for a chapter 11 plan and prompt conclusion to these Chapter 11 Cases. The Committee waited for more than a decade and looks forward to the Trustee’s proposal and confirmation of a chapter 11 plan.
WHEREFORE, the Committee respectfully requests that the Court enter an order approving the Settlement Motion and awarding such further, different relief as it deems appropriate.
Dated: April 25, 2022
Baltimore, Maryland
QUINN EMANUEL URQUHART
& SULLIVAN LLP
James C. Tecce
51 Madison Avenue
New York, New York 10010
Telephone No.: (212) 849-7000
Facsimile No.: (212) 849-7100
TYDINGS & ROSENBERG LLP
/s/ Alan M. Grochal
Alan M. Grochal, Bar No.: 01447
1 E. Pratt Street, Suite 901
Baltimore, Maryland 21202
410-752-9700
agrochal@tydingslaw.com
Co-Counsel to Official Committee of
Unsecured Creditors of TMST, Inc., et al.
Source: PACER [Docket 699]
No objections filed by 4/25/22.
Supplemental Notice of Settlement Between the Trustee and JPMorgan, Citigroup, Credit Suisse and UBS Defendants Filed by Joel I. Sher (related document(s)[3184] Notice of Settlement filed by Trustee Joel I. Sher (4/11/22)
Objections deadline is 4/25/22.
Hearing scheduled for 5/10/22 at 2:00 by videoconference or teleconference (for hearing access information see www.mdb.uscourts.gov/hearings or call 410-962-2688).
Source: PACER [Docket 3192]
Common never had a chance.
The Senior Notes will not be made whole. Holders like me might get at least 33 cents on the dollar with the upside being how much GS actually paid.
Sr Subordinated Notes were $1.3 billion. Then there was about $214 million in Jr Subordinated Notes.
Preferred stockholders were next in line.
I expected a settlement, but nothing this low.
Well there are objections being filed for other matters. Regardless, I think it's safe to conclude none of the common shareholders will never see a dime.
Understood.
However, I have been involved in cases that changed direction.
Liquidate:
"Furthermore, upon approval of the Defendants’ Settlement, the Trustee will file a stipulation of dismissal of the Adversary Proceeding with prejudice and intends to then move forward and propose a liquidating plan in order to make a distribution to creditors and wind up the bankruptcy cases and Debtors’ estates."
https://document.epiq11.com/document/getdocumentsbydocket/?docketId=947310&projectCode=TMI&docketNumber=3185&source=DM
One unknown remains - the amount paid by Goldman Sachs in the settlement filed under seal.
I still have CUSIP 885218800 in my account. Never claimed it as a worthless stock. There was some small part of me that (for a while anyway) held out hope that shareholders might get some tiny recompense, even though the preferred and bond holders got priority. That part died years ago, but at least now there is closure.
Application to Compromise Controversy with JPMorgan, Citigroup, Credit Suisse and UBS Defendants Adversary Proceeding #: 11-00340, Filed by Joel I. Sher, Chapter 11 Trustee (4/04/22)
The estate should have at least $90 million in cash.
It will be interesting to see if TMST liquidates or attempts to reorganize.
The End
Sadly.
Is this it then?
https://document.epiq11.com/document/getdocumentbycode?docId=4070014&projectCode=TMI&source=DM
What are the implications?
Lease extension posted on the docket shows a cancellation right for TMST as of August 1, 2022. I can only assume the end is near and we should get this wrapped up before year end.
Only 12 years later!
Among the redacted files from the BK docket, I see some initial references to a plan of wind down.
Now that we are deposing bank officers the case seems to be moving forward again.
Legal careers have been made on this Ch 11 file...Ridiculous.
I missed it in my review.
If I was a defendant and saw how this played out earlier for the others, I would settle.
I noticed a line in the redacted Susman billing for a correspondence to a lawyer regarding settlement discussions. Not sure if that was a slip in the redaction process. Some detective work pointed to the Citibank team. Whether that is an economic discussion or not remains to be seen, but as we press closer to an actual court appearance (next year?), it would make sense for one more of the banks to break from remaining defendants and decide to settle.
Settlements are most likely a thing of the past.
Thanks to COVID-19, legal fees and pre-judgment interest continue to rack up.
Anyone reading the tea leaves see a discussion with Citibank regarding a settlement? Would be an interesting development. The delays to depositions have created a difficult path forward in the case...
Monthly Operating Report (7/2019)
Cash and Cash Equivalents were $72.35 million.
Total Assets were $67.463 million including a $6 million contra account for Investments in Subsidiaries. This would indicate negative equity in those subs. However, the account shares a footnote with Pre-Petition Liabilities - Unsecured Debt.
Net Loss in July was $390,948.
And I haven’t been watching prices.
Nothing to report case-wise.
Nearly 2 months since the last trade in these?
http://finra-markets.morningstar.com/BondCenter/BondTradeActivitySearchResult.jsp?ticker=C170460&startdate=08%2F18%2F2019&enddate=08%2F18%2F2020
I see 22 / 34.5 on the bid/ask but rarely check in as I'll hold until finality anyhow.
-V
yep. I have an estimate in my sheet and I own a little bit but was trying to figure out if I should move some of my SYCRF to more of this.
Still doing calcs.
Yes, it is.
You will also notice that there is no amount mentioned for the settlement with GS (4).
Hey EI-
Is this the same thing at footnote #7 on the recent MORs (page 10 of Docket 2953).
I'm sorry about the multiple responses. Haven't been on IHub in years and forgot it would take a while to submit but then could go through multiple times shortly thereafter by continuing to click submit.
Hi Enterprising Investor,
Do you know what was said during the status update?
Aren't all of the key cases settled now? Why not wind this thing up and make liquidating distribution(s)?
Thank you very much for your continued efforts to keep noteholders updated on the status of the court proceedings!!
Notice of Status Conference (11/15/2019)
The Official Committee of Unsecured Creditors filed a Motion on 10/29/19 seeking a status conference.
Blood sucking lawyers. You bond holders whole yet?
Monthly Operating Report (6/2019)
Cash and Cash Equivalents were $76.210 million.
Total Assets were $71.335 million including a $6 million contra account for Investments in Subsidiaries. This would indicate negative equity in those subs. However, the account shares a footnote with Pre-Petition Liabilities - Unsecured Debt.
Net Loss in June was $227,084.
Post-petition Accumulated Interest Income totals $6.7 million.
This includes only about $4.5 million of $30 million in certain Owner Trust residual interest distributions that may require Bankruptcy Court ruling to resolve ownership issues. To be conservative, TMST has not recorded a $25.5 million receivable or the related income.
Thus, there is the potential to recover up to $25.5 million towards the end of the case.
Trustee retains the right to see the surcharge or recovery of any portion of the MSR Sale Commission from the Counterparties.
$2,253,360 remains subject to claim.
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Sr Subordinated Note holders have a claim of $1.3 billion, while Jr Subordinated Note claims are $213.8 million.
All claim amounts listed above do not take into account any post-petition interest payable from the filing date forward.
Court - Case Numbers- Defendant(s)
USBC Maryland | Docket Date | USDC Maryland | Defendant(s) | Damages | Recovery |
10-00137 | 3/2/2010 | 10-01895 | SAF Financial et al | $22 Million | Settled for $6.5 Million |
11-00329 | 4/28/2011 | 11-01982 | Barclays Capital Inc | $94 Million | Settled for $23 Million |
11-00337 | 4/29/2011 | 11-03192 | Countrywide Home Loans | / | Settled for $3.1 Million |
11-00338 | 4/30/2011 | 11-02796 | Goldman Sachs | $71 Million | Undisclosed |
4/30/2011 | 11-01998 | RBC Capital Markets LLC | $35 Million | Settled $31.125 Million | |
11-00340 | 4/30/2011 | JP Morgan Chase et al | $1.3 Billion | RBS Settled for $23.5M |
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