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I just wonder if the LT was fully intending to settle the remainder of Class 18 claims with any leftover Preferred Equity Interests , set aside shares, or Common Equity Interests. The LT's assertion that it doesn't matter the preferred equity interest definition did not name the underwriters, makes me very suspicious. At a minimum, I think her objection blocked them from doing any further damage to equity. jmho
Glad to see you acknowledge that you were harmed by the LT's action. You miss the entire point of the appeal. POR 7 as written and as approved blocks the underwriters from getting preferred equity interests. The LT should have gone to the bankruptcy court and reform the POR if their manufactured excuse is valid. This at a minimum would have required notice to those holding preferred equity interests. Instead the LT chose the low road. If nothing comes to the residual, I and others are better off getting back those 1 % of wmih shares no matter what the amount of the underwriters' class 18 allowed claim comes to be. Hopefully we can get Alice's and Rozen's attorney fees paid for through the LT's error and omissions policy together with any other damages. Do you know the limits of the Policy? Does it cover such an intentional act? Perhaps we can get a clawback of fees, and have all of LT's actions audited and examined. You sound too passionate in your posts. What is there to fear? We have already been told we are not getting any residual. The LT is telling us there is nothing behind Door Numbers 1, 2, and 3. Is there a Door Number 4? Another escrow account created per terms of the POR? Another Delaware Statutory Trust? Alice can and will destroy all of the LT's assertions in the LT's brief in her Reply Brief. Did you notice the LT fails to cite any authority for their assertions?
You need to read the actual documents and not believe what the LT deliberately misstates about them in their brief.
And the preferred holders have already been harmed whether or not anything comes from the residual of the estate. If the LT did not illegally amend the definition of preferred equity interest, each preferred legacy holder of wmi would have been distributed 1 per cent more wmih shares than what they received. This is because the underwriters shares did not come from the ten million set aside shares for creditors, but from the shares earmarked for and to be allocated among legacy preferred holders. see Sargent's email. So if the underwriters remained in CLass 18, Class 19 legacy would today have 1% more wmih holdings, regardless if Class 18 is paid in full or not. And no one can say yet whether or not CLass 19 legacy is better off because underwriters are in Class 19 because we do not know what the allowed amount the underwriters would get in Class 18, and we do not know the amount of the total residual. Do not assume the underwriters would automatically get a $24 million dollar allowed claim in Class 18. We already know their settlement figure was 1.4 million shares of wmih. To say Class 19 legacy is better off is just spin to justify the wrongdoing.
Equity courts must follow the law. The bankruptcy court is considered a court of equity. The WMI Liquidation Trust is a Delaware Statutory Trust.
Delaware Statutory Trust
§ 3801 Definitions.
A statutory trust is not required to execute its governing instrument. A statutory trust is bound by its governing instrument whether or not the statutory trust executes the governing instrument. A beneficial owner or a trustee is bound by the governing instrument whether or not such beneficial owner or trustee executes the governing instrument. A governing instrument is not subject to any statute of frauds (including § 2714 of Title 6).
http://delcode.delaware.gov/title12/c038/sc01/index.shtml
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No one is arguing that the LT did not have the power to settle with the underwriters. What is being argued is that power was restricted i.e all settlements must comply with the terms of POR 7 and bankruptcy law. The LT could have given the underwriters common security interests.
What the LT is attempting to do is violate this rule of law by mentioning matters outside of POR 7;
In general, the parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties' agreement.
Thank you. All one has to do is read the link i gave to the original stipulation, and compare to the LT brief and one will readily see that the LT outright misrepresented the facts. Why? Cause the LT has nothing of substance to refute ALice's arguments.
Just because the LT makes an excuse in their brief doesn't mean squat. The only issue here is does the as approved POR 7 allow them to do what they did. It doesn't. What the LT did does not fit within the POR 7 definition of "preferred equity interest." That is the only definition that all the classes approved.
Here is another applicable canon:
Omitted-Case Canon. Nothing is to be added to what the text states or reasonably implies (casus omissus pro omisso habendus est). That is, a matter not covered is to be treated as not covered.
There are canons of construction/interpretation of contracts. The canon applicable here is:
The expression of one thing implies the exclusion of others (expressio unius
est exclusio alterius).
The enumeration of the three types of preferred equity interest operates to exclude the underwriters.
They were included after the fact because the POR definition did not include the underwriters in the definition of "preferred equity interest" and it certainly was not mentioned in the disclosure statement that the underwriters were to be treated as such.
Paragraph 3 on page 4 of the original Stipulation shows that only the word "equity" was used---not preferred equity. http://www.kccllc.net/wamu/document/0812229110204000000000003
So where are you seeing all this classified 3 ways? It was not in the original stipulation. Where is it set forth in POR 7? It isn't. The LT surely would have spelled out the exact provision and paragraph that so stated in their brief. Yet the LT does not. Why? Cause there is no such provision.
Then in the LT's reply in the bankruptcy court, the LT clearly states that the LT
added to the definition of "preferred equity interest." There would have been no need to "add" to the definition if as you state the POR already allowed it. Moreover, if the LT had the power to "add" to the definition the LT would have cited where in the POR the LT was given this power. They do not, because the LT was not given such power. Just citing such a provision would have single-handedly destroyed Alice's arguments.
And it is very doubtful that a notice which recites that the LT did this "in accordance with the plan" would start any time ticking, given it was clearly a lie and lulled people into thinking what the LT did was appropriate.
Maybe it was her way to get into the record the other questionable actions/settlements undertaken by the LT. Me thinks there is a strategy behind her objection. I am expecting further actions/motions to get some sunlight shining on what the LT has done. jmho.
If I recall correctly per boardpost discussion, the nols would have been 17 billion had the number of shares that changed hands during/at bankruptcy would have been slightly different. The disputed shares now earmarked for legacy shareholders may change the calculation. I believe the LT through A and M and tax counsel have always been aware of the possible adjustment and that the "we believe" language also is there for that reason together with what you say about the IRS. Royal: Rozen imo knows nothing about the possible impact this CIC calculation has on the nols. There were several issues that the moniker CIC identified.
The ownership change might still matter. Remember the "we believe" language. Once the remaining shares in the Disputed Equity Reserve get distributed to legacy shareholders, the ownership change that disqualified the use of certain NOLS above and beyond the 6 billion may no longer be applicable and make available a few billion more in nols for coop use.
Consider this. If nothing is coming back, by being in class 19 they got 1.4 million shares of wmih. Now if they return the shares and disclaim the escrow markers associated therewith, and go to class 18 look what could happen. They could get an allowed agreed claim of $24 million. Now 46 of existing class claims plus 24 u/w claim equals 70 million total. 32/70 x 24 equals a hell of a lot more than what they would get if they stay in 19 if nothing else coming to 18. jmho Also why didn't the LT just say directly the additional recovery for LT will not get anything more rather than using words like "likely" "presently" etc.
So Sargent's email basically indicates that the 10,000,000 set aside shares were NOT used to settle the underwriters claim.(Note only 190 million shares were used to compute the 75/25 split). So where are these 10,000,000 shares today? Were the shares used to pay creditors as contemplated? Are the shares going to be used to pay Class 18? Are the shares unused and going back to Coop and retired? ( WMIH if I recall always used 206,000,000 for the longest time as issued and outstanding shares). Are the shares going to be distributed to escrow holders together with the Disputed Equity Shares the employees did not get? Are the shares going to be sold and the proceeds used to pay the LT payroll until Libor is settled? AND if the shares have been used to pay creditors etal, do the shares come with escrows?
short interest 6.73 million as of end of June.
Rule 3022. Final Decree in Chapter 11 Reorganization Case
After an estate is fully administered in a chapter 11 reorganization case, the court, on its own motion or on motion of a party in interest, shall enter a final decree closing the case.
Notes
(As amended Mar. 30, 1987, eff. Aug. 1, 1987; Apr. 30, 1991, eff. Aug. 1, 1991.)
Notes of Advisory Committee on Rules—1983
Section 350 of the Code requires the court to close the case after the estate is fully administered and the trustee has been discharged. Section 1143 places a five year limitation on the surrender of securities when required for participation under a plan but this provision should not delay entry of the final decree.
Notes of Advisory Committee on Rules—1991 Amendment
Entry of a final decree closing a chapter 11 case should not be delayed solely because the payments required by the plan have not been completed. Factors that the court should consider in determining whether the estate has been fully administered include (1) whether the order confirming the plan has become final, (2) whether deposits required by the plan have been distributed, (3) whether the property proposed by the plan to be transferred has been transferred, (4) whether the debtor or the successor of the debtor under the plan has assumed the business or the management of the property dealt with by the plan, (5) whether payments under the plan have commenced, and (6) whether all motions, contested matters, and adversary proceedings have been finally resolved.
The court should not keep the case open only because of the possibility that the court's jurisdiction may be invoked in the future. A final decree closing the case after the estate is fully administered does not deprive the court of jurisdiction to enforce or interpret its own orders and does not prevent the court from reopening the case for cause pursuant to §350(b) of the Code. For example, on motion of a party in interest, the court may reopen the case to revoke an order of confirmation procured by fraud under §1144 of the Code. If the plan or confirmation order provides that the case shall remain open until a certain date or event because of the likelihood that the court's jurisdiction may be required for specific purposes prior thereto, the case should remain open until that date or event.
With 2.1 million volume probably due to Russell rebalancing.
No, not with Alice's appeal. Her gripe is with the LT not any of the parties we released. I suppose if she prevails, there could be a shakeup in personnel at the LT. Perhaps some kind of accounting would be asked for. If I recall correctly I think Alice stated in her brief, that the time to sue for damages for breach of fiduciary duty has expired. The best we can hope for is that it forces the LT to release information concerning potential recoveries for escrows. jmho.
All that was agreed to in the initial stipulation ( pre por) was that the underwriters could be classified as an equity claim. Then the POR was adopted and approved which clearly indicates that the underwriters could not be classified as preferred equity. Whether or not there was an understanding that the underwriters were to specifically get a preferred claim, it wasn't in writing and wasn't mentioned in the disclosure statement. So that makes that argument irrelevant. Once approved the POR terms precluded the uw from getting preferred equity interests without first getting a lawful modification to the POR. The LT then was left with two choices. To either go to court and have the POR modified or to reach a settlement with the underwriters which met the terms of the LT's governing instrument ie the por (paying them with more set aside shares perhaps?). The path they chose was more sinister than an "accomodation."
Where in the bankruptcy code is amendment to the POR allowed by a liquidiating trustee to accomodate a creditor?
Why can't the LT amend the POR to eliminate common escrows to accomodate Marta?
Well if the Final Stipulation is upheld on appeal, the LT will get bolder and bolder and perhaps eliminate common escrows altogether so the underwriters can get 25% more. Then some people might come around.
Quote: "9. Pursuant to the Liquidating Trust Agreement, which was incorporated by reference in the Plan and approved pursuant to the Confirmation Order, WMILT was authorized to object to and settle disputed claims after the effective date without court approval."
Yes, but they had to do it without violating bankruptcy law and the POR. The LT admitted they had to add to the definition of preferred equity interest in order to accomplish what they did. Show me where the POR allowed them to amend. How can a bankrupty court which is a court of equity approve something that was done illegally.
Okay. But a short time before the hearing, the LT came out and said the LT put in a claim for Libor settlement proceeds. An example of the double speak.
And I am saying that with all the double speak we have gotten from the LT and Rozen over the years, it is worth spending Class 18's money to determine why nothing is left for escrows.
But in equity the beneficiaries are considered the true owners of the trust. We have the right to know everything was/is done on the up and up.
I have pointed that possibility out in the past. That by getting 1.4 million shares of wmih (pre split) the uw received a definite amount of 1.4 million dollars....something the uw might not even get if it stayed in Class 18. But if it was in the best interests for equity to take this deal, why didn't the LT argue this at the hearing? Moreover, why did the LT refuse to turn over all correspondence between the underwriters and the LT regarding the settlement to back up this argument?
I would say next to nothing will come from Libor to escrows. The WMB bondholders would be entitled first, and they are owed billions. The LT threw that bone at us to stop us from becoming restless and demanding an accounting. The LT does not even state a probability of recovery. Yet they did so for tax refunds. And if memory serves, Libor was not even mentioned at Alice's hearing.
Based on what is represented by the LT, it looks like nothing will reach the escrows. But based on the LT's questionable behavior concerning the underwriters, I simply cannot take the LT's word for anything at this point. If the escrows are worthless, why not directly state so in the response or at the hearing?
Look at page 21 of the LT Response to Alice's objection too. The LT admits they are trying to broaden the definition of Preferred Equity Interests .
" Pursuant to the express terms of the Final Stipulation, the “Class 19 Claims shall
be allowed in the amount of $71,953,536.09 and treated in accordance with Section 23.1 of the
Plan,” thereby adding such claims to the definition of “Preferred Equity Interests”. "
If the underwriters just got wmih shares there would be no need to change the definition. Ten million shares were set aside to pay some creditor claims. There was no set aside of either preferred or common escrows .
If the underwriters did not receive preferred escrows, then why did the LT not just state so? That would have been the kill shot to Alice's objection.
I beg to differ. The fact that the underwriters may or may not have owned preferred shares is irrelevant to the settlement at issue. If the underwriters signed releases they would have received preferred escrows for the shares they owned . If the underwriters did not sign releases they did not receive preferred escrows for the shares owned. The settlement involves a claim for attorney fees etc for indemnity covenants. Why would that give rise to a right to be paid in part by preferred escrows? It wouldn't.
Well, if your assertion were correct, then the LT and underwriters would have argued her objection failed to state a cause of action and be dismissed without a hearing. They did not. The right to object to a claim continues up to the time the bankruptcy closes. The bankruptcy is still open. The claim had not been liquidated/determined till after the effective date. So supposing a creditor files a claim for $1 million which is not settled at the effective date. The Lt agrees to pay the creditor $2 million. Are you saying because the LT was given discretion in the POR to settle the claims, that someone cannot object to the overpayment?
11 U.S. Code §?1109. Right to be heard
U.S. Code
Notes
Authorities (CFR)
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(a) The Securities and Exchange Commission may raise and may appear and be heard on any issue in a case under this chapter, but the Securities and Exchange Commission may not appeal from any judgment, order, or decree entered in the case.
(b) A party in interest, including the debtor, the trustee, a creditors’ committee, an equity security holders’ committee, a creditor, an equity security holder, or any indenture trustee, may raise and may appear and be heard on any issue in a case under this chapter.
(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2629.)
You would have to ask the underwriters that question. I realize that Alice is arguing for the complete elimination of the underwriters claim, but it seems what concerns her most is the fact the underwriters got preferred escrows. So, if the escrows are indeed worthless at this point, why don't the underwriters strike a deal with her to drop her appeal (and save lawyer fees) in exchange for them forfeiting their escrows?
Yes, imo the basis of a court decision should always be spelled out so the public can determine and remove the judges that are incompetent/ crooked / biased.
Well, the court can simply state "affirmed" with no explanation as to the basis of the decision. I would not want to be the person who has to write the response to Alice's brief. One can only avoid the arguments so much. But a maxim is that equity must follow the law. It was agreed upon approval of the POR that preferred would not be diluted by the operation of the definition of preferred equity interest. The LT had no power to change that and deny the preferred the benefit of their bargain. Here are a few other maxims one can pick and choose to justify their opinion.
2.1 Equity considers that done what ought to be done
2.2 Equity will not suffer a wrong to be without a remedy
2.3 Equity delights in equality/Equality is equity (Aequalitus est quasi equitas)
2.4 One who seeks equity must do equity
2.5 Equity aids the vigilant not the indolent
2.6 Equity imputes an intent to fulfill an obligation
2.7 Equity acts in personam (i.e. on persons rather than on objects)
2.8 Equity abhors a forfeiture
2.9 Equity does not require an idle gesture
2.10 He who comes into equity must come with clean hands
2.11 Equity delights to do justice and not by halves
2.12 Equity will take jurisdiction to avoid a multiplicity of suits
2.13 Equity follows the law
2.14 Equity will not assist a volunteer
2.15 Equity will not complete an imperfect gift
2.16 Where equities are equal, the law will prevail
2.17 Between equal equities the first in order of time shall prevail
2.18 Equity will not allow a statute to be used as a cloak for fraud
2.19 Equity will not allow a trust to fail for want of a trustee
2.20 Equity regards the beneficiary as the true owner
I agree that the LT had the right to settle the underwriters claim with the set aside wmih shares. But the POR did not give the LT the right to settle the underwriters claim with preferred equity interests . And Alice has cited 3rd Circuit precedent which establishes that Walrath's decision based on laches was not justified. She has a shot at winning imo.