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Ref: CBA09, were the servicing rights an asset of WMI, the parent or WMB or a Sub? Either way wouldn't that asset have to be paid for or returned? TIA
Comment:
Servicing rights are generally retained by the orginator.
Assets transferred / sold to a Trust for securitization are assets of the Trust. These Trust owned assets ( Loan Receivables ) provide the collateral protecting the certificate holders interest. When sold to investors, (certificate holders), the initial proceeds are then forwarded to the originator.
Hope the above helps.
Ref: Thank you for your response. I do have one more question re the Conditional Exchange Event (CEE) that occurred with the TPS Securities. I was of the opinion that they automatically became WMI Securities with the bankruptcy. How does the CEE relate to the highlighted statement below.
PG 59 POR7:
23.2 Cancellation of REIT Series: Notwithstanding the provisions of Section 23.1 hereof, on the Effective Date, all REIT Series shall be deemed extinguished and the certificates and all other documents representing such Equity Interests shall be deemed cancelled and of no force and effect. For the avoidance of doubt, this Section 23.2 shall have no effect on, and shall not result in the extinguishment or cancellation of, the Trust Preferred Securities and, in accordance with the Global Settlement Agreement, JPMC or its designee is the sole legal, equitable and beneficial owner of the Trust Preferred Securities for all purposes.
Comment:
Section 23.2 makes it clear JPMC is the sole legal equitable and beneficial owner.
What is mystery / not clear - how JPMC can reap the benefit of Trust Preferred Securities without being the provider of such funds. It would be highly irregular that such benefits could be JPMC without JPMC providing due compensation.
Ref: is it standard or common in these trusts that the originator keeps the residual interest certificates?
Comment:
While it is common for the originator to keep residual interest, their interest is small in comparison to that of the SPE# 1. At least from my experience.
Ref:- if that is the case, how much % of the trust initial value can be the value of the residual interest certificates?
Comment:
% of residual interest certificates varies from trust to trust. And profitability varies based on:
1) Performance of underling collateral - current vs delinquent vs
foreclosure,
2) Refinancing,
3) Prepayments, etc.
Ref:
- while reading the prospectus of some of the trusts, I found that the servicer retains around 0,40 - 0,50% as servicing fees depending on the PSA. I assume these quantities will remain with JPM that has been the servicer since 2008 or do you believe some of these fees could be kept in some account for the benefit of wmi lt?
Comment:
No benefit to WMI. Servicing fees belong to respective providers of service.
Ref: There is a theory where only Common Escrows, as the true owners of the original WMI estate as per pre-bankruptcy rights, benefits from the former WMI estate ie the Safe Harbor assets of WMI and Pref escrows only benefits from the Preferred Offerings that backed those securities.
I have two questions.......
1) If this is true, would Common and Pref holders who did not sign releases to elect to participate further be eligible to benefit from any returned Safe Harbor assets as they are bankruptcy remote and since releases were a bankruptcy process??? Using that theory's logic (kudos to goodietime).
Comment:
The answer is what you provided in # 2) below:
2) In the POR (pgs 59-60 quoted below) it clearly states that "ALL DOCUMENTS" pertaining to Prefs and Commons are deemed cancelled relating to WMI, (the Debtor),...not the Trusts. How could this be reconciled with the above theory???
Furthermore-
The court approved the negotiated 75/25 %. As for Non-release stakeholders, they have no standing, they do not exist.
Only released share holders, while being the last paid, will reap the greatest treasure - Safe Harbor Sssets. Some ripe and some still generating revenue. It's "abundantly" clear they are still there!
Ref: Do you think part of the DB distribution is coming to escrow markers?
Comment:
If and only if:
1) WMI and or it's subisidiaries were participants in said Trusts. Participants via the SPE# 1 which hold the lions share of Residual Interest Certificates, and
2) The powers managing / controlling this shameful saga are ready to bring it to an end.
Ref: CBA09, if safe harbor rules protect the assets to pre-bankruptcy ownership then its distribution should not apply to POR7. Does that mean escrow markers are moot? Will all Wamu shareholders receive a distribution including the non-releasing ones? Thanks in advance for your input. I have been wondering about this for some time.
Comment:
Liquidation of assets involves two distinct assets:
1) Property of the Bankruptcy Estate - (Por7 applies).
2) Non-Property of the Bankruptcy Estate - Safe Harbor Assets ( regular bankruptcy code procedures / priority apply).
While the above two are distinct in nature "ALL" residual interest will go to Escrow Markers. So, no, not moot. Escrow Markers are the legacy shareholders. Thereby, have final legal standing and in turn sole contractual rights / title in residual interest.
Ownership Chain -
WMI owns the assets of WMI and in turn has legal title to all the assets of it's subsidiaries. Shareholders of WMI have legal title to all the assets of WMI. All assets that end up in WMI thru it's subsidiaries are thereby assets that WMI shareholders have legal contractual rights.
Por7, thru its declarations, have addressed the distribution of liquidated Bankruptcy Estate Assets. All residual interest of estate assets will go to Escrow Markers per the 75 % / 25 % allocation.
Since our Safe Harbor Assets are outside the bankruptcy estate, those captured within SPE/Trusts will follow each respective Pooling & Service Agreement (PSA) provisions. Generally, it's Parent that receives cash flows of residuals. Note, SPE# 1 create the SPE# 2 /Trusts, SPE 1 are many times direct subsidiaries of the Parent. And, SPE # 1's have a great deal of involvement in residual interest of SPE # 2 / Trusts.
In a solvent entity shareholders cannot force a distribution. A Corporation, thru it's board, has to declare a distribution of it's profit before shareholders are to receive any distribution in the form of dividends.
PSA are compelling and indivisible - only one end stop - Escrow Markers.
Ref: CBA09, are we hoping or is it conclusive that escrows will be the beneficiary of a hundred or so Trusts in Safe Harbor?
Comment:
I have no doubt. Do not the Hedge Funds / 100 + Institutional owners make it abundantly clear?!!!?
Ref: Based on your experience, if applicable, what is your opinion on the following.............
1) Does the GSA govern ALL future distributions of Safe Harbor assets (only) to our "Markers" or will it revert to pre-bankruptcy ownership rights of the different classes ie Preferred and Common???
Comment:
"Safe Harbor" rules within Bankruptcy Code governs the protection of "ALL" distributions of Safe Harbor assets.
Our situation - Retained Assets ( which will be there ) within SPE/Trust are in the form of residual interests via Certificates held by subsidiaries of WMI (Parent). Safe Harbor rules protect these assets to pre-bankruptcy ownership. The Court nor the estate have no avoidance / claw back power. Fact - Court will ensure / protect the transfer of these assets to it's rightful certificate holder.
I contend WMI being the Parent and having a security interest it's subsidiaries which in turn that have a security interest via holders of security certificates of SPE/Trust residual certificates will reap the value of these Safe Harbor assets. Finally, WMI's legacy holders(escrow holders) gets the so-called Retained Assets. And, yes they will be there.
2) Can any party (FDIC, DTC etc) other than the WMILT make cash distributions directly to our "Markers" for any Safe Harbor assets held outside of the bankruptcy process???
Comment:
Yes, very likely to happen. Reason, the Residual Certificates are securities.
3) As the reorganized WMI, does WMIH own or are they entitled to any of the Debtors pre-bankruptcy assets/interests, other than that which was transferred during the reorganization process (ie WMMRC and 100% Equity in WMIIC) and clearly stated in the GSA???
Comment:
Yes, those assets, if any, that were transferred past a Pooling & Service Agreement cut off date. They would not be protected as Safe Harbor Assets.
4) Is the WMILT the sole and rightful "inheritor" and arbiter of the entire Debtors (WMI + WMIIC) estate,..bar none???
Comment:
The Court has the ultimate authority.
Happy New Year CBA and TIA for your response.
Ref: Isn't the dramatic change in retained earnings indicative of the transferral of MBS Trusts and WMI's corresponding participatory cash flow into bankruptcy remote safe harbor accounts triggered by the change of ownership event???
Comment:
Reduction ( dramatic change ) to Retained Earnings would not be related to outflow of cash to bankruptcy remote safe harbor assets.
Changes to Retained Earnings are mostly due to the following:
1) + adds to Retained Earnings - when Income exceeds Expenses from Profit & Loss Statement.
2) - reduction to Retained Earnings - when Expenses exceeds Income from Profit & Loss Statement.
3) - reduction to Retained Earnings - when Dividends paid.
4) - Prior period error ( + or - ) to Retained Earnings ( would result in adjustment to previous stated Retained Earnings which did not account for the error ).
5) - Change in accounting principle ( + or - ) would result in restating Retained Earnings as if the change happened retroactively.
Retained Earnings is a nothing more than a collective result of past transactions that would be reflected on the Profit & Loss Statement. WMI investment in WMB was abandoned as worthless so the entry would be as follows:
- Investment in WMB - Credit ( Asset - Balance Sheet )
- Loss on Investment in WMB - Debit ( Expense - Profit & Loss Statement )
The Loss ( Expense ) from the Profit & Loss Statement would transfer to Retained Earnings as a reduction.
Do not be overly concerned with Retained Earnings. While having a positive Retained Earnings is a sign of profitability transferred from the Profit & Loss Statement, Parent Companies generally use up ( reduce ) Retained Earnings via Dividends or Investments.
For us escrow holders - Important assets are those in Safe Harbor.
Ref: So the +$18B in Retained Earnings listed under Stockholders Equity (pg 104) in WMI's last official 10K was an actual +$18B deficit rather than surplus cash or assets???
Comment:
Retained Earnings:
Pg 104 as of 2007 - $ 18 B is a plus.
The 9/26/08 and 2/29/12 Pre-petition $ 16.7 B and $ 20.7 respectively are Negative ( deficit ).
Ref: . Just what Are' ?, a company's "Retained Earnings" ?, ... and were' the company's, ... "Retained Earnings", ... Bankruptcy Remote
Comment:
Retained Earnings is a permanent "accumulation" account. A given balance is the result of "TOTAL" PAST:
1) Net Income. ( increases Retained Earnings )
2) Net Losses. ( reduces Retained Earnings )
3) Dividends Paid. ( reduces Retained Earnings )
Each fiscal (year end) the net result of temporary accounts (i.e., income and expenses ) from the Income Statement are zeroed out . If Total Income for that year is higher than Total Expenses the net result is an increase to Retained Earnings.
Example: Year end - 2008 Entries to zero out Income Statement Temporary accounts -
Debit Credit
Income $ 1,000
Expenses $ 750
Retained Earnings $ 250 - (Increase as Income greater than Expenses)
Note: a Negative Retained Earnings is a Deficit - meaning:
1) Past Expenses have been greater than Past Income from the Income Statement.
Ref: Retained Earnings, pre-petition as of 09/26/2008 = Deficit $16,739,175,191.00
Retained Earnings, pre-petition as of 02/29/2012 = Deficit $20,770,648,942.00
Comment:
Appears $ 4 Billion of the $ 4.04 decrease in Retained Earnings was related to recognizing the exchange event of trusts preferred. The accounting journal entry would be as follows:
1) Retained Earnings deduction - ( Theory here is that past earnings transferred )
2) Preferred Trust increased
Ref:
Do you agree or not agree that WMI (the parent) relinquished ownership of WMB when WMB was seized? The only ownership WMI had in WMB was in the stock of WMB that was abandoned (*worthless stock abandonment") which created the NOL).
Comment:
Trustee abandoned and thereby no longer an asset of the estate. IRS Revenue Code 165 G-3 allowed the capital loss to be classified as an ordinary loss (NOL).
Ref:
From that point on WMI had no control of WMB or WMB subs whatsoever as WMB was sold to JPM as a "Whole Bank Purchase".
Comment:
Whole Bank as in assets - $ 298 Billion vs liabilities 258 Billion.
Ref:
Your comment regarding WMI has control of safe harbor assets.
Do you agree or not agree that Safe Harbor Assets are the actual assets within the various trusts that are protected for the benefit of the actual investors (certificate holders) within each trust?
Comment:
Safe Harbor Assets are those assets that have statutory exemption from the bankruptcy systems. Securitization qualifies for such exemption.
Ref:
Do you agree on not agree that payment (proceeds) for assets sold into the trusts has already been received and the only future benefit (besides servicing fees) relating to these trusts would be the retained interest in the trusts and are recorded as an asset on the balance sheet?
Comment:
Proceeds:
1) $ for the initial transfer of pooled mortgages.
True Sale -
Balance Sheet - Remove assets loan mortgages
Income Stmt - Difference between proceeds received (cash) minus loan mortgages transferred = Net Gain or Net Loss.
2) $ Retained Interest.
Balance Sheet - Residual Interest Receivable (Estimated future benefits)
Income Stmt - Income from Residual Interest
Note: Lions share of the Residual Interest (Retained Assets) remain with SPE # 1 - as a Safe Harbor Asset.
Ref:
On a consolidated basis in each 10Q & 10K the retained interests have been listed (I have gone back as far as 2004) and the total retained interests (not credit card related) were as follows:
in billions
MBS:
2004 - 1.62
2005 - 2.80
2006 - 1.90
2007 - 1.71
2008 - 1.23
Comment:
This reflects only a small % of the overall Residual Interest. Lions share protected within SPE #1 - Based on my experience.
Ref:
It's been said that there was a minimum 25% participation in these trusts which IMO is not the case and the only benefit going forward from 2008 was the retained interests.
Comment:
My experience from 1978 - 2004 - No Regulated Minimum. But, Certificates are issued for the Residual Interest and held by SPE # 1 ( Largest % ) and Originator ( there retained % much smaller ).
Ref: Fact or fiction on required or not required to participate and %% please.
I say required so as to show good faith ya aint peddling junk
Comment:
While I know of no "regulation requirement" to participate I have never seen a PSA Provision that did not include the SPE # 1 not holding a % of certificates.
Specifically:
1) Residual Interest, vis a via, "Retained Assets."
2) Subordinate Class - Helps with the creditworthiness and alleviate realized losses. ( a so-called good faith offering )
Hope the above helps.
Ref: Couple of questions for you.
In post #498826 you made the comment
WMIIC's role was two fold:
1) Provide / Solidify assets "MBS" as bankruptcy remote. By way of "WMB" (Originator) to WMIIC (Depositor) to Trust. In effect a TWO TIER protection. Totally taking WMB out of any risk of substantive consolidation.
2) WMIIC being the depositor would also be the provider of credit enhancement. Having what is referred to as residual interest. Holders of subordinate certificates & overcollaterized loans.
Are you making an assumption in your comments above?
Comment:
Yes, assumption. My Point / Big Picture - no matter who is the depositor - Material "Force and Effect" of two tier structures.
Ref: In all of the trusts listed in the DB lawsuit as well as numerous other trusts I have seen WMB or a sub of WMB has been the originator & depositor.
If WMI or WMIIC was neither the originator or depositor for the trusts how does that benefit the estate of WMI/WMIIC?
Comment:
Safe Harbor Assets are removed from the estate. Thus. Trustee / Creditors of WMB have no claim to them. WMI is the parent they do.
Example:
Principal Subsidiaries
• Washington Mutual Bank, FA, a federal savings association, all of the common stock of which is held by New American Capital, Inc., a Delaware corporation, and all of the preferred stock of which is held by Washington Mutual, Inc. New American Capital, Inc. is a wholly owned direct subsidiary of Washington Mutual, Inc.
• Washington Mutual Bank, a Washington state chartered stock savings bank, a wholly owned direct subsidiary of Washington Mutual, Inc.
• Washington Mutual Bank fsb, a federal savings bank, a wholly owned direct subsidiary of Washington Mutual, Inc.
• Long Beach Mortgage Company, a Delaware corporation, a wholly owned direct subsidiary of Washington Mutual, Inc.
Ref: Also, On a previous post #498722 you said:
2) WMI abandoned it's stock as worthless on record with the Estate. The Estate in turn diverted all future benefits back to WMI. A clever astute move by WMI.
Where are you seeing that WMI is receiving any future benefit from WMB with regard to the trusts or are you making an assumption?
Comment:
No assumption. First 1) WMI is the parent and rightful benefit to any / all future value of it's wholly owned subsidiaries. If you have any experience in PSA you will see that they are set up to ensure the "Retained Assets" are in fact retained within the SPE # 1 / SPE/Trust # 2.
I want to make this abundantly clear, sharing from my experience, generally the Parent's bank account is where the funds are first received from PSA accounts when the "Accounts Removable Provision" is triggered. Then the Parent has control and funnels whatever money's it deems necessary back to it's subsidiaries. The Parent's control part is the "Operative Word." As no expressed contract (s) are in force so as to direct the Parent as to distribution with funds received. This adds further protection to avoid substantive consolidation by the courts.
Ref: My thoughts were that WMI's substantial Trust interests would not be reflected on the books as "Retained Assets", but rather as some type of "Income Line Item" in their financial filings.
Comment:
Two places:
1) Balance Sheet - Asset ( Debit ) Residual Interest ( Estimated Present Value - Future Cash Flow )
and corresponing - ( Credit )
2) Income Stmt - Income Line Item - (i.e., from Securitization / or Other Income).
Note: Regulations requires At least Quarterly the revaluation of Residual Interest.
Ref: I have my own views as per the limited value of the "Retained Assets" but would like your take on same. See post# 500809 for the relevant links and page numbers.
I have read Post - 50089 It reflects - Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.23 billion at June 30, 2008, of which $1.13 billion are of investment-grade.
Comments:
I am glad to see "ONLY" $ 1.23 Billion as of June 30, 2008. Aggregate of "Retained Assets" are captured within the Trusts.
Why so -
1 -Primary reason - protected from WMB creditors and not included within the estate.
2- Secondary reason - for each Dollar of Retained Assets retained by WMB a corresponding increase Capital is required.
Nothing out of the ordinary here. Secure / Sound "Retained Asset" protection via using the Bankruptcy Remote SPE's to own Residual Certificates. Common practice is to have a Residual Certificates for each the following:
1) Excess Spread Account
2) Cash Collateral Account
3) Collateral Investment Account
4) Subordinate Securities.
In addition the Residual Interest maintained by WMB often times there is a provision with the PSA to pledge back to the Trust it's Residual Interest if insolvency is triggered.
Ref: Thank you CBA09. That is what I suspected originally. Safe Harbor assets release should have been controlled by the MBS trustee. What I don't understand is how DB as trustee could be discharged from probate without WMI receiving our assets? If DB is gone, who is the current trustee of our assets?
Comment:
Once a Trustee is discharged it signals the complete liquidation of the Trust Assets. No need for a Trustee.
We no longer care about a Trustee. Are assets are protected.
Safe Harbor assets:
The "Retained Assets!" Residual Interest in such assets are represented by A Residual Certificate. Generally the first SPE within a two SPE Tier -MBS.
Like (WMMIC - SPE - Tier # 1 & SPE/Trust - Tier # 2. WMI being Parent reaps the final benefits.
Ref: 1031 Exchange - I do not believe so with Terminated Trust Assets. To be fully terminated means all obligations are satisfied to certificate holders. And, all assets liquidated to cash.
Ref: 1) Could you explain the significance of the fluid Conditional Exchange between the Cayman Pref Securities-Trust Securities and WMI.
Comment:
The funds raised by the offerings were classified as Core Deposits thru the issuance of preferred stock. Thus a obligation within the equity section of the balance sheet - WMB
When the exchange event happened the obligation to the investors of the preferred stock went to WMI. In tandem so did the equitable interest in remaining balance of the initial $ 5.4 Billion HEL.
Ref: Is there a time limit for disclosure of what's in safe harbor?
Does FDIC have any fiduciary duty to disclose final accounting of all assets in safe harbor? If so, is there a time limit?
Comment:
We are talking Off-Balance Sheet Assets - FDIC has not seized MBS in SPE's/ Trusts assets. They have no control or standing with such assets. The pooling & service agreements govern the disposition of all "Retained Assets" respectively within each Trust. Here - "WMI" in its sole capacity as Parent will the final recipient. That is why those in the know wanted "IT ALL" for themselves.
Off-Balance Sheet Assets are those sold and the only requirement of WMB was to reflect the following:
As of each Balance Sheet Date. - Monthly
1) Remaining Principal Balance of those sold assets as Off-Balance Sheet.
2) Risk Obligations such as Recourse Liability.
3) Trigger Events that might accelerated / increase obligations.
4) Description of Trigger events, etc.
Also in 8-k of the Risk Section such estimated obligations would be disclosed.
Ref: Could there be a filing soon where FDIC asking for extension just like WMILT? Is that possible? I think it is..
Comment:
As for extension-
FDIC-R is not bound by time limitations in bringing resolution to a failed bank or thrift. Thus no need to file.
As for claims-
Yes, FDIC is bound by the same statue of limitations, within six years.
Ref: Therefore, the FDIC must make "the Final Payment" to WMI/WMILT on or before December 12th MAX for "WMB and it's assets", or WMI/WMILT will file litigation to re-open the Case due to the Six Year Litigation Rule. GSA/DS agreement date is Dec 12th.
Comment: There is a six year rule that applies to recovery of a claim. WMI/WMILT most likely will file to seek recovery for those assets not belonging to WMB and in error transferred to JPM. Also, this rule applies to the FDIC.
As far as the FDIC must make "the Final Payment" on or before 12th December I do not believe so. Here is why - FDIC is not limited by time constants in winding down the affairs of a failed institution. Resolution, has all to do about any existing claims or ongoing litigation.
FDIC has immense powers.
The court cannot and will not interfere with the FDIC in it's capacity of closing out / termination procedures.
FDIC is on the hook and liable for the "NON WMB assets transferred to JPM. The monetary damages must be resolved and this I believe has a lot to do with the extension.
Ref: Question: doesn’t the FDIC require a “release” before any $ distribution happens?
Comment:
No FDIC can make distributions at any time on claims. FDIC makes a determination based on available funds on what claims to pay. Of course they is a priority order and unfortunately shareholders are last.
Of importance is that final release / closeout of FDIC receivership will not happen if any unresolved litigation exist. Assets not of WMB that were transferred to JPM must be put back or paid for.
So yes the follow is correct-
Answer: The FDIC will be released when they "Make the Final Payment" according to the GSA and POR7
Ref: Question: doesn’t the FDIC require a “release” before any $ distribution happens?
Comment:
If referring to "Retained Assets" in Trusts - No
Ref: Any insight on that possible impediment, timing and what would be the process and timing? (i.e. what has to happen prior to them getting such a release?) Thx
Comment:
Only insight is the "Retained Assets" of fully matured Trusts are being suppressed. Without any reservation many Trusts have fully matured or had been accelerated to Termination. Refinancing was booming from 2008 and on. Many did two within a few years.
My take on a so called impediment. Maybe not an impediment at all. When the Power Players, ( Tepper's of the world ) nod we get paid too.
Ref: The bankruptcy estate does not have jurisdiction over these SPE's/ Trusts. WMI in its capacity of equity interest does."
Question - 1
So, WHY isn't anything being distributed?
Comment:
The powers to be are surely suppressing the distribution of "Retained Assets" within trusts that have terminated.
Clearly, amounts within each Trusts are known. Monthly, reconciliation is required for each separate bank account. There are many Bank accounts for example:
1) Over-collateralized cash account,
2) Excess spread account,
3) Reserve account,
4) Income account from subordinated certificates owned by the credit enhancer this is generally the depositor, very likely WMIIC,
5) Income from rents of REO until liquidated,
6) Escrow and etc.
Question - 2
Is it usual to wait and get it all at once?
Comment:
No.
As each Trust Terminates a final vouching / reconciliation is performed. Once completed, a full accounts removal takes place. This is generally a clearing of all Trust bank accounts to the Parent. Here, from my experience, no expressed contractual agreement to do so exist. Thus, added protection of being bankruptcy remote. As,to have a written agreement to do so, would show control, and put in jeopardy the "Retained Assets" remaining bankruptcy remote.
Ref: What do you believe was WMIIC's role, IF ANY, with respect to the SPE's/Trusts.
Comments:
WMIIC's role was two fold:
1) Provide / Solidify assets "MBS" as bankruptcy remote. By way of "WMB" (Originator) to WMIIC (Depositor) to Trust. In effect a TWO TIER protection. Totally taking WMB out of any risk of substantive consolidation.
2) WMIIC being the depositor would also be the provider of credit enhancement. Having what is referred to as residual interest. Holders of subordinate certificates & overcollaterized loans.
Ref: IMO, WMIIC ""owned/controlled"" these Trusts on behalf of and for the sole benefit of WMI and NOW the WMI Estate/Tracking Markers.
Comments:
SPE/Trust are designed for independent ownership. Not controlled by WMI nor WMIIC.
Yes these SPE's/Trust are the "Crown Jewel" of WMI in it's capacity of being the Parent. Also Facts of great importance:
1) The bankruptcy estate does not have jurisdiction over these SPE's/ Trusts. WMI in its capacity of equity interest does.
2) WMI abandoned it's stock as worthless on record with the Estate. The Estate in turn diverted all future benefits back to WMI. A clever astute move by WMI.
A Turnover action is routine Bankruptcy procedure to bring back to WMI estate what is considered estate assets. And SPE/Trust Income is not part of the estate assets.
We are all good here with the SPE's/Trusts of the Parent - WMI.
Ref: The solution lies within the "Inception Balance Sheet" and the $40.2B "asset - related equity adjustments."
Comment:
Classic example of GAAP miss-appropriation at its finest. A $ 40.2 B entry to create insolvency.
Inception Balance = Solvency of WMB ( Positive Equity - $ 26.4 B ).
Then - $ 40.2B impairment adjustment.
Current Balance = Insolvency of WMB ( Negative Equity $ 19.4 B ).
What I find interesting:
Notation of Unproven Liabilities -$ 272.3 B. Why!!! Any first year accountant understands that Liabilities are the easiest to prove or disprove.
This has me scratching my head. As liabilities are what is owed to outsiders and can be vouched via source documents.
Why?!!? Then can there can be in the "Current Balance":
1) Asset "Impairment" Adjustment of $ 40.2B which is based on estimations,
BUT
2) "No" Liability Adjustment which is based on hard material evidence.
Little doubt in my mind - Dubious GAAP application.
Ref You most likely wouldn't debate plastic processing or manufacturing with me.
Comment:
I would be all ears.
Ref: I agree, but pard hopefully you know me by now, I may think one thing but until it becomes a reality IT AINT!!!!!!!!!!!!!!!!!!
Comment:
Understood!
I am, by nature, very conservative. Fortunately, these issues of accounting, banking and to some extend legal as related to my career experiences are my forte.
Ref: Thanks for your input into the discussion of these VIP issues, they are extremely appreciated by all, i'm sure. I do find it odd though that those who often criticize and belittle us less learned posters, seem to religiously avoid any rebuttals to your contributions. IMO, that says a lot!
Comment:
These are not merely my opinions. What I have addressed are based on facts!
Thank you for your kind words.
Ref: Now CBA09 are you referring to the actual bankruptcy Estate as far as any and all assets because if you are I concur 100% that NONE of this bankruptcy remote assets comes back to the former WaMu Estate?
****HOWEVER***
I assume you are talking about the bankruptcy remote assets AND in my view these ALL come back to the investors who signed timely releases by 2/2012 and who now have Escrow ShareMarkers in their accounts. This all is returned 75/25 all the way to the last bankruptcy remote dollar.
Comment:
Both are correct. As the court has no jurisdiction over assets that are not consideration assets of the estate.
By disclosing the worthless stock of WMI within the bankruptcy filings all "Future" asset value attached to WMI stock goes to the shareholders, ( in our case those that released ). As ownership rights attached to WMI stock, in turn transfers to Escrow Share Markers.
Ref: I have always wondered if these rules if you will are only governing what happens WITHIN THE BK, but NOT OUTSIDE OF IT.
Comment:
We have some prominent people, Hedge Funds, that are leading the charge. They paid little attention of what lied within the estate.
Ref: One thing is for sure,that is all entities deemed Equity are not invested so heavy over so many years waiting on the chance they get a crumb at the feast.
Comment:
Cash flow is king. Why were so many Hedge Funds here and did release? Simply put, these "Business Moguls" jumped on here as they got wind of the massive future cash flow being generated.
Ref: How much value? And how would this play out, going forward?
Comment:
Any and All future value returned!
By WMI disclosing, via filing, it's stock in WMI as "Worthless" it effectively reclassified any future assets as bankruptcy remote. Thus, any and all future value will no longer be considered as assets of the estate.
A very clever move!!
Ref: I actually thought about this very point and had previously been of the opinion that abandonment meant WMI relinquished their full rights of control over WMB. It never occurred to me that this was a move that was legally permissible, if it was done under the umbrella of the bankruptcy.
Comment:
Yes, a clever filing. By fully disclosing as worthless stock at the time of bankruptcy filing it gives WMI full and complete ownership of any future value return. Further is satisfies "Any & ALL" future value returned as assets removed from the bankruptcy estate. Thus future value being bankruptcy remote!!
Ref Would this really also apply to WMI even though they never securitized or sold any MBS's?
I believe WMI would have transferred assets to WMIIC as it seemed to be their Investment Management Vehicle.
In such a case, how would WMIIC's assets be treated post bankruptcy with regard to the WMILT and WMIHC?
It was specified (in an LT MOR, not sure) that WMIHC owns the Equity and the WMILT owns the assets of WMIIC.
In addition there is the "No reversion (of LT Assets) to the Debtors" clause in the LT Agreement.
I honestly believe we're sill missing a lot of important pieces here.
Comment:
WMI is the parent and thereby have ownership rights to all the assets of it's children, namely subsidiaries. Holding companies are the "Gem" within it's conglomerates. Their survival is dependent upon it's revenue of it's subsidiaries. The courts know this and will support this ownership position.
On another issue,do you think that by WMI having abandoned it's stock in
WMB as worthless will remain worthless? I don't. This was an astute move. By doing so, having this on record within the bankruptcy, any value that returns will not be an assets of the bankruptcy estate and whollly retained to WMI.
Ref: As per with K-MART BK the Debtors did not disclose the safe harbour assets,which at the end shareholders got zero.
At the end the assets gave the new K-MART a big boost and rocketing the price per share close to 500% within a year or two.
So my question is could WMIH end up with this assets just like K-MART and screw escrows?
Comment:
No. WMI the parent has ownership rights. Same token those that have rights to what WMI has rights to will own the same. Here sits escrow holders.
Ref: CBA09, I'm guessing you have given this some astute consideration. You feel 3 to 4 bucks per escrows share is "Waaay too little". Then, is 6 to 7 bucks per escrows share doable for common?
Comment:
Yes
Ref: Any idea as to timing? Are we looking at sometime before or after the end of 2018?
Comment:
I believe timing will be two fold:
1) That what happens within the finalization of receivership before the end of Sept 2018,
2) That what happens outside of the receivership, specific to Bankrupcty remote entities - SPE's. This, I strongly believe, is were the lions share of recovery will come. Each SPE / Trust is governed by the expressed language of each PSA. There a many and most likely many have reached ripeness while others continue until to carry out payment compliance to investors / certificate holders.
These stand alone SPE's have many accounts that keep separate various types of revenue. I know from first hand experience the amount of retained assets within can be massive. Many Trusts have 6-7 tranches with 10's of Thousands of loans in each tranche.
When a given Trust's PSA has completed it's fulfillment to certificate holders a provision called "Accounts Removable" takes place. But before the actual removable is initiated a reconciliation of "Retained Assets" takes place. This is the vouching of reports to $ in the captive cash accounts along with any remaining over "Over Collateralized Pooled Receivables." Then a true-up, namely $ distribution is performed by the Master Servicer. Here, from my experience, the Holding Company (WMI) would be the receiver of these retained assets.
Now the question is when will this happen. Since this is outside of Bankruptcy it could have happened with each fulfillment of PSA. Then again it could be ( for completed "True-ups" ) in tandem with the finalization of Receivership. Then of course, as those that meet fulfillment a payout accordingly.
Ref: CBA09 What led you to invest in WAMU and did any of your co-workers feel the same way?
Comment:
My banking experience. I am semi- retired CPA.