Lovin' it !
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The writing is on the wall. This is chapter 11 reorganization, and part of reorganization includes re-structuring your capital structure that includes stock and debt.
If WMI gets the money in the DDA and all of the WMB NOLs (which they won't get), do you really think that they will take all of their cash and hand it over to the creditors? I don't think they will do that, and how they will make their creditors whole will be by either giving them part cash- part new stock, or they will make their creditors whole by giving them all new stock.
The dollar volume on the WMI bonds over the last year tells the story along with the billing statements.
If they pay more for those, the money goes to the FDIC and then to the banks' creditors.
Welcome to the wonderful world of receivership.
They offered $8/share when WMI still had the banks. WMI no longer has bank business and therefore nobody, especially JPM, would pay $8/share for a bankless WMI.
$24 is a complete pipedream that will never happen.
3 x book = ZERO
Yeah, there will be a lot of multi-millionaires because of wamuq soon.
You will only collect what you sell your shares for.
Provide a valid link showing the supposed write-up of the supposedly fraudulent write-down.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 8, 2009
JP MORGAN CHASE & CO.
http://investor.shareholder.com/jpmorganchase/secfiling.cfm?filingID=1193125-09-249194
Check out page 22 regarding WaMu losses.
MINUTE ORDER granting 85 Motion for Leave to File Under Seal by Defendants JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A. It is hereby ORDERED that the Declaration of Bruce W. Hickey and exhibits attached thereto shall be sealed. Signed by Judge Rosemary M. Collyer on 12/8/09. (lcrmc1) (Entered: 12/08/2009)
SEALED Declaration of Bruce W. Hickey filed by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION. (This document is SEALED and only available to authorized persons.)(zrdj) (Entered: 12/08/2009)
Case No. 1:09-cv-01743 (RMC)
JPM owns 100% of WMBfsb, and that's the way it is.
Where is the EC? Oh yeah, that's right, they don't have permission to intervene and the committee is actually represented by a total hack (which is one of the many reasons the debtors oppose a committee).
If an EC is actually formally recognized, there will always be plenty of time to get in and make plenty of money by buying AND selling.
Providian = part of the bank =
Visa Shares = owner to be decided upon (even if WMI gets the shares they are relative peanuts)
WMB assets Re-evaluation = $13 B = Goes from JPM to the FDIC to distribute to bank creditors
WMBFsb CASH =$17B = $17B in BANK capital = not WMI's
WMB Mortages Re-evaluation = JPM wrote the portfolio DOWN $29B afer purchase
Wind Energy Business = NOT $500-$100 million
WMI is restructuring, and new shares are inevitable.
The bond trading tells the story imo, and the writing is on the wall.
Lots of HUGE DUMPS at the bid.
210,975 shares dumped at .1062
289,025 shares dumped at .1062
279,025 shares dumped at .106
210,000 shares dumped at .106
Is it "longs" dumping commons and moving into preferreds?
Is it large holders dumping their shares for losses?
Or is it just "mm games" ?
MOTION to Dismiss by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (Clark, Bruce) (Entered: 12/07/2009)
Case No. 1:09-cv-01743 (RMC)
http://www.ghostofwamu.com/documents/09-01743/09-01743-0089.pdf
MEMORANDUM re 89 MOTION to Dismiss filed by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION. (Clark, Bruce) (Entered: 12/07/2009)
Case No. 1:09-cv-01743 (RMC)
http://www.ghostofwamu.com/documents/09-01743/09-01743-0090.pdf
Joint MOTION to Dismiss FDIC as a Party and for Remand, or in the Alternative, Dismissal Without Prejudice for Lack of Subject Matter Jurisdiction, filed on behalf of All Plaintiffs by AMERICAN NATIONAL INSURANCE COMPANY (Smith, Gregory) (Entered: 12/07/2009)
http://www.ghostofwamu.com/documents/09-01743/09-01743-0088.pdf
MOTION to Dismiss for Lack of Jurisdiction Pursuant to F.R.C.P. 12(b)(1), MOTION to Dismiss for Failure to State a Claim Pursuant to F.R.C.P. 12(c) by FDIC, AS RECEIVER FOR WASHINGTON MUTUAL BANK, HENDERSON, NEVADA (Clarke, David) (Entered: 12/07/2009)
http://www.ghostofwamu.com/documents/09-01743/09-01743-0087.pdf
Check out this poor soul. He buys WMI bonds at $90, sells them at $14, and now he claims that WMI owes him money. This is the funniest claim I have ever laid my eyes on.
Uh, your honor, I'm a moron and sold my bonds at the bottom and now they are currently trading at what I initially bought them for. I didn't have to sell at $14 but I did, so can you please have the debtors reimburse me for my losses??????
Response in Opposition to Fourteenth Omnibus Objection to Claims
http://www.kccllc.net/documents/0812229/0812229091207000000000002.pdf
Texas Pacific Group 230,140,944
http://moneycentral.msn.com/ownership?Holding=5%25+Ownership&Symbol=WAMUQ
Texas Pacific Group 230.1M
http://data.cnbc.com/quotes/WAMUQ/tab/8
Texas Pacific Group 230.14 M
http://finance.aol.com/company/washington-mutual-incorporated/wamuq/nao/institutional-ownership
You can check ETrade, Scottrade and other sources, and they will show that TPG owns 230.1 Million shares of wamuq.
Guess what?
TPG does not own 50% of the outstanding shares, and they didn't invest $7B of their money buying WM.
It's just like when it goes up on volume of 3-4M shares in the first couple of hours it's "good" or "heavy" volume, but when it goes down on the same amount of shares in the first couple of hours it's "down on "light" volume".
Naked shorts wouldn't even show up in the accounted-for short data.
Well, if holders of these shares will receive warrants, then shorts will have to cover(and if warrants are issued and they don't cover, then there will be 40M "holders" that will not get their warrants), or maybe the shorts that have been covering feel it's not worth the interest they have been paying on the borrowed shares to keep waiting for cancellation as most of the shorts made a substantial killing on their positions.
As far as TPG goes, they will not get paid.
She will rule before January 19th . and the debtors have multiple plans in place as well imo. I am curious as to whether or not THJRC will be making a ruling on the WMB NOLs soon too.
Now I know most people don't feel that there will be new shares issued, but that is an absolute given imo. The real question is how are shareholders going to be "treated". Will WMI issue current shareholders warrants that are essentially worthless just to keep shareholders "involved" or will they just leave them out to dry?????? Even if warrants are issued, there would likely be a ridiculous strike/exercise price, and even if the price was reasonable, many holders wouldn't even have the money to exercise them.
No matter what happens, decisions will start being made soon, and I am still convinced that current shareholders are not going to like the outcome and am still convinced that the dollar volume and prices related to the WMI bond trading tells the story.
tick tock
Who knows? Maybe Sleet wanted them to try and work things out before he expended any time on the case. Either way, mediation was unsuccessful, which isn't surprising imo.
As far as the bk goes, the debtors only have until January 19, 2010 to file a reorg plan.
Fourth Order Pursuant to Section 1121(d) of the Bankruptcy Code Extending Exclusive Periods for the Filing of a Chapter 11 Plan and Solicitation of Acceptances Thereto
http://www.kccllc.net/documents/0812229/0812229091120000000000007.pdf
tick tock
MEMORANDUM re 85 MOTION for Leave to File Under Seal filed by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION. (Hickey, Bruce) (Entered: 12/07/2009)
http://www.ghostofwamu.com/documents/09-01743/09-01743-0086.pdf
MOTION for Leave to File Under Seal by JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (Hickey, Bruce) (Entered: 12/07/2009)
http://www.ghostofwamu.com/documents/09-01743/09-01743-0085.pdf
Case # : Case No. 1:09-cv-01743 (RMC)
NOTICE OF COMPLETION OF MEDIATION
Case #08-12229 (MFW)
Case #09-cv-734 (GMS)
"PLEASE TAKE NOTICE that mediation took place on November 30, 2009 and the parties did not reach a settlement in this matter.
Dated: December 7, 2009"
http://www.ghostofwamu.com/documents/09-00734/09-00734-0020.pdf
I didn't leave out anything. The statement about "the debtors being the creditors" is UNTRUE. The debtors are not the creditors.
Matt's post stated that the debtors oppose the formation of an EC.
The debtors are not the creditors.
The debtors are Washington Mutual Inc and WMI Investment Corp., and if she said that the debtors oppose an EC, that means that the debtors oppose and EC. The debtors are not the creditors.
So, the debtors AND the creditors oppose the formation of an EC.
Have a good weekend!
Washington Mutual Bondholders To Disclose Holdings
The news is on the DOW JONES wire.
Goldman, Deutsche Bank AG, Citigroup, and Bank of America collectively hold $3.26 B of Washington Mutual Inc debt.
Court docs:
OPINION1
http://www.ghostofwamu.com/documents/08-12229/08-12229-1952.pdf
ORDER
http://www.ghostofwamu.com/documents/08-12229/08-12229-1953.pdf
$4B isn't even close to enough cash to absorb the HUGE LOSSES that WMI's execs were "underestimating".
WOW, 13 whole US cents???????
"I can't wait for the deposit outflows report for JPM that must be released soon."
Huh? If you are referencing deposit outflows that flowed out of JPM then those numbers are easily accessible. If you are talking about the deposit outflows report showing the money that flowed out of WMB prior to the receivership, then you should rephrase your statement so I can tell what you are trying to say.
Discovery does go both ways, and discovery will eventually show where the cash in the DDA came from , who authorized the transfer, why they authorized the transfer, why they authorized the transfer when they did, and whether or not the transfer of "that cash" should have ever been authorized.
Many like to reference IM as a source of record that will "help" WMI prove wrongdoing, but IM is actually a source of record that can and most likely will hurt WMI in the long run.
By the way, JPM didn't acquire WMI, and therefore the supposed solvency of WMI as it relates to JPM being "not eligible to acquire them" is a complete joke.
Also, you claim that "no one wants to talk about JPM's exposure to all the asset classes WMB was exposed to", and I definitely find that statment entirely LAUGHABLE !!!!!!!
Don't worry "It is coming real soon", but what "it" is will wake a lot of people up, and if you think you can't "count Government money", then I would politely tell you to THINK AGAIN.
Actually WMI owned shares of WMB, but WMB is/was its own entity business and is/was not an object (like a car in your "example").
WMB (the business) generated their own NOLs, nobody else generated their NOLs, WMI did not generate WMBs NOLs, and WMI is not entitled to WMBs NOLs.
You own shares of WMI. Do you get WMI's NOLs????? Of course not, because you are not WMI. You are only a shareholder of WMI.
In addition, since WMB was placed into receivership and since WMB had its own CREDITORS, WMI's shares in WMB are worthless until the creditors are made whole.
You actually cannot claim an NOL if you were not the company that generated the NOL. WMI did not generate WMB's NOLs and therefore they are not entitled to the benefits of the NOLs generated by WMB.
The NOL in the previous 5 years belongs to the company (WMB) that generated the NOL, and the 5-year carry-back provision has nothing at all to do with who the NOL belongs to and has everything to do with how far back an NOL can be carried back . The recently passed legislation has absolutley nothing to do with ownershp or amounts of NOLs and has everything to do with what an entity can do with an NOL. Being eligible or ineligible for the 5-year carryback has nothing to do with ownership of an NOL.
Weil even argued themselves that the tax-sharing agreement is basically worthless, which it is.
Let's say Mickey Mouse paid the taxes on behalf of company A (and subsequently company A reimbursed Mickey Mouse for MM's payment of Company A's taxes), and let's also say that years following the payment of taxes (for which company A was legally responsible, regardless of whether Mickey Mouse or anyone else initially paid those taxes) company A generated a NOL in the amount of $15 billion. Regardless of who initially paid the taxes on behalf of company A, company A is the one who was responsible for paying the taxes, and company A is also the one who is legally entitled to the tax benefits related to the NOL generated by company A. If company A took tarp funds, that doesn't mean that company A loses their NOLs, it simply means that company A can only carry back their nOLs 2 years and can "save" the rest in order to carry the rest forward.
In the above scenario, do you think Mickey Mouse is entitled to the NOLs, or do you think Company A (aka the company that actually generated the losses) is entitled to them?
Now maybe JPM isn't entitled to all of WMB's NOLs, and maybe the FDIC isn't entitled to WMB's NOLs, but WMI is not WMB, nor do they own WMB (WMB is/was a separate business), and to suggest that WMI is entitled to WMB's NOLs or any other tax-related connections is simply wrong.
The stocks WMI had in WMB are worthless, and those ARE NOT NOLs and are capital losses, and capital losses are something entirely different that NOLs.
The ownership of "the deposits" is actually small potoatoes as it relates to the grand scheme of things, and even if the cash in the DDA were to be turned over to WMI tomorrow, it would not help the shareholders of WMI.
The only think that "its too late" for is the shareholders of WMI, and unfortunately there are many that are going to have to learn the hard way.
Got it dude?
You can give up the talk about TARP and warrants as they are completely irrelevant to the real issues surrounding the WMI cases.
Everybody knows the OTS was/is incompetent. They were allowing back-dated capital contributions for c_ _ _ _ _'s sake. Their incompetence doesn't matter. WMI was seized, and the Government has that power. The real battle is regarding what the bank should have been sold for. Some (like WMI's attorney's ) claim the bank was worth $50 billion, others claim that it was worth zero dollars (it's like Olympic Scoring , throw out the high and the low, and come up with something in the middle), and there is an amount somewhere in the middle that will eventually be agreed and/or decided upon which will result in the "re-valuing" of the bank and the "sales price".
There are also other "issues" like WMB's NOLs, which many claim are 100% WMI's, but that simply isn't true. If it were true, then WMI would record refund amounts as receivables and wouldn't simply list them as "notes" to their MORs. There are going to be many disappointed WMI shareholders when this is all "worked out".
I have said it before and I'll say it again, when the bank is revalued, the WMB creditors (and there is more than just the WMB bond/noteholders) will be made whole, and it is highly unlikely that the "re-valuing" of the bank will result in WMI getting anything more than they are owed as a creditor of WMB.
If the bank is revalued at $13 billion, WMI will get approx. .6-.7 billion, if the bank is revalued at $15 billion, WMI will get approx. .6-.7 billion, etc. etc.
People act like it is unfair that FSB had billions of dollars in it, but guess what, banks are supposed to have money in them. Banks are supposed to have capital , and by the gorilla math of many people, it seems that they feel WMI should have transferred all money out of the banks before the seizure and if they would have done that it would have been ok, but unfortunately for many people, "it" doesn't work that way.
In addition to "all that", there will be a trial that includes discovery related to the actual transfer of the money to "the deposit account" imo. Many feel that the Doreen Logan deposition is/was enough for Walrath to make a decision , but it is clear that is not the case. WMI's attorney's should have requested a full trial regarding "the deposit" account a LONG TIME AGO so that ALL evidence regarding "the deposit account" was out in the open, but they chose not to do that. There is no doubt that "the cash" is in a DDA, however, it is not clear as to the origins of that money and/or why that money was transferred to the DDA and/or if "the cash" should actually be in the DDA.
Interesing ? Yes. Clear-cut? Obviously not, otherwise this would have been ruled on a long time ago, and I don't want to hear any BS about Walrath having a busy schedule and/or Walrath making sure the Is are dotted and the Ts are crossed. People that use those excuses are also the ones that claim that if she would have ruled against WMI she would have done so quickly and a long time ago, but that is pure silliness imo.
Thirteenth Monthly Application of Richards, Layton & Finger, P.A. for Allowance of Compensation for Services Rendered and for Reimbursement of Expenses as Counsel to the Debtors and Debtors-in-Possession for the Period from October 1, 2009 Through October 31, 2009
http://www.kccllc.net/documents/0812229/0812229091201000000000001.pdf
"REPLY OF THE FDIC-RECEIVER IN FURTHER SUPPORT OF ITS
MOTION FOR AN ORDER MODIFYING THE AUTOMATIC STAY
M. Blake Cleary (No. 3614)
Jaime N. Luton (No. 4936)
YOUNGCONAWAYSTARGATT
& TAYLOR, LLP
1000 West Street, 17th Floor
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
-and-
Thomas R. Califano
John J. Clarke, Jr.
DLA PIPER LLP (US)
1251 Avenue of the Americas
New York, New York 10020
Telephone: (212) 335-4500
Facsimile: (212) 335-4501
Attorneys for the
Federal Deposit Insurance Corporation, as
Receiver for Washington Mutual Banlc
Dated: December 1, 2009
1 The Debtors in these chapter 11 cases along with the last four digits of each Debtor's
federal tax identification numbers are: (a) Washington Mutual, Inc. (3725); and (b) WMI
Investment Corp. (5395). The Debtors' principal offices are located at 1301 Second Avenue,
Seattle, Washington 98101.
DB02:8986649.1 067816.1001
Table of Contents
TABLE OF AUTHORITIES .......................................................................................................... ii
PRELIMINARY STATEMENT ................................................................................................... 1
I. THE FDIC-RECEIVER HAS CONSISTENTLY RESERVED ITS RIGHTS
UNDER SECTION 9.5 OF THE P&A AGREEMENT .................................................... 4
II. THE OTHER GROUNDS FOR OBJECTION ARE EQUALLY MERITLESS .............. 7
A. "Cause" Exists for the Requested Relief From the Stay ........................................ 7
B. The FDIC-Receiver Has Valid Setoff Rights ...................................................... 10
C. The Status of the 4234 Account Is Subject to Numerous
Disputed Issues of Fact ........................................................................................ 13
III. THE FDIC-RECEIVER HAS NOT CONCEDED ANY DISPUTED ISSUE IN
SEEKING RELIEF FROM THE AUTOMATIC STAy ................................................ 15
CONCLUSION ............................................................................................................................ 17
D802:8986649.1 i 067816.1001
Table of Authorities
Baldino v. Wilson (In re Wilson),
116 F.3d 87 (3d Cir. 1998) ......................................................................................................... 7
Citizens Bank v. Strumpf,
516 U.S. 16 (1995) ..................................................................................................... 2,9, 10, 15
Gross v. Bell Sav. Bank,
974 F.2d 403 (3d Cir. 1992) ................................................................................................. 4, 15
Holloway v. lR.S. (In re Odom Antennas, Inc.),
340 F.3d 705 (8th Cir. 2003) ................................................................................................... 15
Howell v. Bank o/Newnan (In re Summit Fin. Servs.),
240 B.R. 105 (Bankr. N.D. Ga. 1999) ............................................................................... 11-12
Huisinga v. Nat 'I Bank o/Waterloo (In re Bohlen Enters., Ltd.),
78 B.R. 556 (BanlaN.D. Iowa 1987) ..................................................................................... .12
In re Continental Airlines, Inc.,
152 B.R. 420 (D. Del. 1993) ...................................................................................................... 8
In re Mu'min,
374 B.R. 149 (Bankr. E.D. Pa. 2007) .................................................................................... 7-8
In re SemCrude, L.P.,
399 B.R. 388 (Banla. D. Del. 2009) .................................................................................. 10-11
In re W.R. Grace & Co., Inc.,
No. 01-01139, 2007 WL 1129170 (Bankr. D. Del. Apr. 13,2007) ........................................... 8
Izzarelli v. Rexene Prods. Co. (In re Rexene Prods. Co.),
141 B.R. 574 (Banla. D. Del. 1992) .......................................................................................... 8
Mktg. Res. Int'l v. PTC Corp. (In re Mktg. Res. Int'l Corp'),
35 B.R. 353 (Banla. E.D. Pa. 1984) ........................................................................................ 15
NY. County Nat 'I Bank v. Massey,
192 U.S. 138 (1904) ................................................................................................................. 12
Russello v. United States,
464 U.S. 16 (1983) ................................................................................................................... 13
DB02:8986649.1 11 067816.1001
Save Power Ltd v. Pursuit Athletic Footwear (In re Pursuit Athletic Footwear),
193 B.R. 713 (Bankr. D. Del. 1996) .......................................................................................... 8
Sherman v. First City Bank of Dallas (In re United Sciences of America, IncJ,
893 F.2d 720 (5th Cir. 1990) ................................................................................................... 11
Westinghouse Credit Corp. v. D 'Urso,
278 F.3d 138 (2d Cir. 2002) ..................................................................................................... 10
Woodrum v. Ford Motor Credit Co. (In re Dillard Ford, Inc.),
940 F.2d 1507 (lIth Cir.), reh 'g denied, 851 F.2d 366 (lIth Cir. 1991) ............................... .12
Statutes
11 U.S.C. § 362(d) ......................................................................................................................... 17
11 U.S.C. § 502(d) ......................................................................................................................... 15
11 U.S.C. § 542(b) .................................................................................................................. passim
11 U.S.C. § 553(a) ................................................................................................................. passim
11 U.S.C. § 553(a)(2) ..................................................................................................................... 12
11 U.S.C. § 553(a)(3) ...................................................... ....................................................... passim
12 U.S.C. § 1822(d) ....................................................................................................................... 13
DB02:8986649.1 iii 067816.1001
The Federal Deposit Insurance Corporation, in its capacity as receiver for Washington
Mutual Bank (the "FDIC-Receiver"), respectfully submits this reply in further support of its
motion (the "Motion") for an order modifying the automatic stay, to the extent necessary, to
permit the FDIC-Receiver to exercise its contractual right under the P&A Agreement to direct
JPMC to return to the FDIC-Receiver certain Disputed Deposit Balances to be held until the
pending litigation among the parties has been resolved?
PRELIMINARY STATEMENT
Under section 542(b) of the Bankruptcy Code, turnover cannot be ordered "to the extent
such debt may be offset under section 553 of this title against a claim against the debtor." 11
U.S.C. § 542(b). Notwithstanding this express statutory prohibition, at a hearing before this
Court on October 22, 2009, counsel for the Debtors and counsel for the Official Committee of
Unsecured Creditors both asserted that the Court should disregard the FDIC-Receiver's setoff
rights and order turnover of the Disputed Deposit Balances because the FDIC-Receiver had not
yet exercised its contractual right to require JPMC to return those balances under section 9.5 of
the P&A Agreement. See Oct. 22, 2009 Hr'g Tr. at 75 ("Well, 9.5 hasn't been exercised. It does
not give them anything to setoff at this point in time. "); id. at 82-83 ("Whatever rights they have,
they have. If they're going to file some motion, the parties obviously will have to deal with that,
but the fact remains today that there is nothing which prevents this Court from entering summary
judgment and ordering the deposits be turned over to the Debtors immediately.").
Now that the FDIC-Receiver has brought that very motion, however, the Debtors accuse
it of "gamesmanship" and disingenuously assert that the FDIC-Receiver's efforts to protect its
legitimate interests against the Debtors' inappropriate litigation tactics somehow represent a
2 Capitalized terms not defined herein have the meaning given them in the Motion.
DB02:8986649.1 067816.1001
change in course. To the contrary, since the beginning of this case, when it filed an objection to
the Debtors' proposed "deposits" stipulation with JPMC, the FDIC-Receiver repeatedly has
reserved its rights under section 9.5 of the P&A Agreement with respect to the Disputed Deposit
Balances, both in its public filings and statements and in private discussions with the Debtors'
counsel. There is no basis to argue that the FDIC-Receiver has in any way waived those rights.
The Debtors' other objections to the Motion are equally meritless.
First, "cause" to lift the stay is obviously established by the Debtors' unflagging efforts
to obtain the Disputed Deposit Balances, before any discovery has been conducted and without
regard for the FDIC-Receiver's setoff rights. The Debtors aclmowledge that the FDIC-Receiver
has claims against WMI, yet by opposing the Motion, the Debtors are seeking to use the
automatic stay as a sword to cut off the FDIC-Receiver's setoff rights with respect to those
claims. The relief sought in the Motion will not harm the Debtors, who will ultimately recover
whatever portion of the Disputed Deposit Balances is determined to be their property and not
subject to setoff, just as the Bankruptcy Code expressly contemplates. See 11 U.S.C. §§ 542(b),
553(a); Citizens Bank of Md. v. Strumpf, 516 U.S. 16, 20 (1995). On the other hand, denial of
the Motion would irreparably injure the FDIC-Receiver and the creditors of the WMB
receivership if, as a result, the Court were to order turnover of those balances to WMI before any
discovery has been taken with respect to numerous disputed issues of material fact.
Second, those genuine issues of material fact include, among others, whether the balances
held in the 4234 account were actually transferred to WMB fsb before WMB was closed and,
even if so, whether such a transfer amounted to an avoidable effort to hinder, delay or defraud
DB02:8986649.1 2 067816.1001
the FDIC or WMB's creditors.3 The Debtors concede that the FDIC-Receiver's rights under
section 9.5 extend to balances held at WMB, where the Debtors' own account statements show
the 4234 account to be held (along with all four of the other accounts at issue on this Motion).
At the October 22, 2009 hearing, the Debtors tried to sidestep this issue. Their objection again
offers no proof that the balance was effectively moved to an account at WMB fsb, instead
relying on unfounded speculation as to why the account statements submitted by the Debtors
themselves contradict their contentions.
Third, section 553(a)(3) of the Bankruptcy Code is entirely inapplicable. That section
looks at when a liability to the debtor was "incurred" and why. To the extent they were incurred,
the Disputed Deposit Balances were "incurred" by WMB, not the FDIC-Receiver, and there is no
evidence that WMB did so with an eye toward obtaining setoff rights against WMI (which
controlled WMB at the time). The FDIC-Receiver succeeded to WMB's rights when it was
appointed receiver. At the October 22, 2009 hearing, the Debtors vehemently argued that the
Disputed Deposit Balances were incurred by WMB in good faith and in the ordinary course of its
business. See Oct. 22, 2009 Hr' g Tr. at 10-12. Whether that was so ultimately will be
determined in litigation, but according to the Debtors' own objection, those are facts that exclude
a "debt owed to the debtor" from the ambit of section 553(a)(3). See Debtors' Obj. ~ 23
(collecting cases). The relief sought in the FDIC-Receiver's Motion, to exercise rights to take
back liabilities pursuant to an express agreement to that effect, does not constitute the
"incurrence" of a debt within the meaning of section 553(a)(3), nor have the Debtors or their
creditor constituents cited a single decision even suggesting that it would.
3 As noted in the Motion, other unresolved material disputes include (without limitation)
whether the accounts were deposit accounts, whether WMB is the owner of some portion of the
Disputed Deposit Balances, and the extent to which funds were credited to the accounts.
DB02:8986649.1 3 067816.1 00 1
Fourth, there is no triangular setoff because mutuality exists between WMI and JPMC
and the FDIC-Receiver. Both the FDIC-Receiver and JPMC have claims against WMI, and
WMI has asserted claims for the Disputed Deposit Balances against both the FDIC-Receiver and
JPMC. The'Debtors' argument for a lack of mutuality is therefore belied by their own litigation
positions, further demonstrating why turnover under section 542(b) of the Bankruptcy Code is
not available until all of the parties' disputes have been decided. The FDIC-Receiver brought the
Motion solely out of an abundance of caution given the Debtors' argument, at the October 22,
2009 hearing, that the FDIC-Receiver's setoff rights somehow could be disregarded in
considering the Debtors' motion for summary jUdgment.
Finally, the Motion does not reflect a concession as to any disputed issue with respect to
the Debtors' summary judgment motion. See Motion at 11 n.7. By seeking a modification of the
automatic stay, the FDIC-Receiver is not conceding that the Disputed Deposit Balances
constitute WMI's "deposits," nor does the protection of the FDIC-Receiver's setoff rights imply
that JPMC does not have its own setoff rights.
I. THE FDIC-RECEIVER HAS CONSISTENTLY RESERVED ITS RIGHTS
UNDER SECTION 9.5 OF THE P&A AGREEMENT
The FDIC-Receiver's assertion of its rights under section 9.5 of the P&A Agreement
comes as no surprise to the Debtors or their creditors. Section 9.5 is not unique to the P&A
Agreement here. To the contrary, it is a standard provision in purchase and assumption
agreements, the purpose and validity of which were expressly recognized by the Third Circuit in
Gross v. Bell Sav. Bank, 974 F.2d 403 (3d Cir. 1992). Since the beginning of this case, the
FDIC-Receiver has consistently reserved its rights, in public and in private communications with
the Debtors. Nor have those rights been waived by any action of the FDIC-Receiver. The
Debtors' challenges to the timeliness of the Motion are equally specious.
DB02:8986649.1 4 067816.1 00 I
Only weeks into this case, in October 2008, the FDIC-Receiver objected to the Debtors'
proposed "deposits" stipulation with JPMC unless that stipulation was modified to protect the
FDIC-Receiver's rights. [D.1. 104]. In subsequent discussions, the Debtors' counsel stated that
the Debtors were prepared to resolve the FDIC-Receiver's objection to the stipulation with
JPMC by entering into a separate stipulation with the FDIC-Receiver under which the FDICReceiver's
rights under section 9.5 of the P&A Agreement would be expressly preserved if the
Disputed Deposit Balances were transferred to another institution.
Given the Debtors' willingness in November 2008 to acknowledge the FDIC-Receiver's
rights under section 9.5 and to put off litigation of that issue until some future date, their
argument that the Motion is somehow untimely rings especially hollow. As noted in the
Debtors' objection, the motion to approve the proposed "deposits" stipulation with JPMC
eventually was withdrawn in January 2009. See Obj. ~ 9 & n.3. Since then, the FDIC-Receiver
has been consistent, and consistently open, about the reservation of its section 9.5 rights with
respect to the Disputed Deposit Balances. On March 30, 2009, the FDIC-Receiver included a
reservation of those rights (and its setoffrights generally) in its proof of claim in this bankruptcy
case. See Clarke Decl., Ex. D, ~~ 25, 27, 52. On June 1, 2009, the FDIC-Receiver observed in
its motion to intervene in the Debtors' turnover proceeding that the Debtors' claims against
JPMC, which had only been asserted a few weeks earlier, "directly implicate[] the FDICReceiver's
rights under section 9.5 of the P&A Agreement." [D.1. 29 at 12]. On the same date,
the FDIC-Receiver made the same observation in its motion to stay both that turnover
proceeding and the separate adversary proceeding initiated by JPMC against the Debtors. [D.1.
26 at 12] In its reply memorandum on its motion to stay, filed on June 22, 2009, the FDICReceiver
reiterated that its rights under section 9.5 prevented "the type of setoff shell game being
DB02:8986649.1 5 067816.1001
attempted by the Debtors," and noted that the Debtors themselves had asserted a claim against it
with respect to the disputed deposits. [D.1. 43 at 14-15]. At the hearing on that motion on
June 24, 2009, the FDIC-Receiver's section 9.5 rights were discussed at length. Finally, in its
submissions in opposition to the Debtors' motion for summary judgment, and at the October 22,
2009 hearing with respect to that motion, the FDIC-Receiver repeatedly and expressly explained
how the motion implicated those rights and therefore could not be granted. [D.1. 97].
The Debtors were aware of the FDIC-Receiver's positions and responded in various
ways, but they never argued, until the current objection, that the FDIC-Receiver had somehow
waived its rights. To the contrary, the Debtors argued that the FDIC-Receiver's setoff rights
should be disregarded in considering the Debtors' turnover motion because the FDIC-Receiver
had not yet sought to exercise its rights under section 9.5. See Reply Brief in Support of the
Motion of Plaintiffs for Summary Judgment, at 36-37 [D.1. 163] ("Thus, even assuming that the
FDIC would 'own' the Deposits if it were to exercise any authority to direct JPMC to withhold
those funds, the fact is that it has not exercised any such authority and has indicated its
reluctance to do so."); see also Oct. 22, 2009 Hr'g Tr. at 75 ("Well, 9.5 hasn't been exercised. It
does not give them anything to setoff at this point in time. ").
As the WMB Bondholders have stated succinctly in response to the Motion, "[t]he
Debtors should not be heard to complain because the FDIC has done exactly what the Debtors
D802:8986649.1 6 067816.1001
said the FDIC had to do to preserve its setoff rights.,,4 This Motion promptly followed the
October 22, 2009 hearing at which the Debtors pressed this argument, and it was originally
scheduled for argument at the next ensuing omnibus hearing in this banlauptcy case (argument
of the Motion at that hearing was adjourned at the Debtors' request). Under the circumstances,
no claim of untimeliness can be made.5
II. THE OTHER GROUNDS FOR OBJECTION ARE EQUALLY MERITLESS
A. "Cause" Exists for the Requested Relief From the Stay
In their objection, the Debtors' misstate both the basis for relief from the automatic stay
that was set forth in the Motion and the applicable standard. What constitutes "cause" is
determined on the totality of the circumstances in a particular case. See Baldino v. Wilson (In re
Wilson), 116 F.3d 87, 90 (3d Cir. 1998); see also In re Mu'min, 374 B.R. 149, 164 (Banla. E.D.
Pa. 2007) ("'Cause' is an intentionally broad and flexible concept which must be determined on
a case-by-case basis .... ") (citation omitted).
Here, the FDIC-Receiver has shown "cause" for the relief requested in the Motion -
modification of the stay to permit it to exercise its contractual rights under section 9.5 of the
4 Repeatedly, the Debtors mischaracterize a statement at the June 24, 2009 hearing at
which the FDIC-Receiver's counsel explained that the FDIC-Receiver "ha[d] not asserted that
9.5 right. Because we do not want to interfere with the administration of this banlauptcy case."
The preceding paragraph of the transcript makes clear that this comment concerned the potential
application of the automatic stay to the FDIC-Receiver's exercise of its contractual rights, an
issue that is addressed entirely by the current Motion. See June 24, 2009 Tr. at 44 ("Under
Section 9.5, we have the right to direct JPMorgan Chase, and whether the stay applies or not, we
could be in here, Your Honor, fighting the stay on that.").
5 The Debtors' repeated references to the passage of more than a year since their petitions
were filed ignores the substantial passage of time that is attributable to the Debtors' own
decisions. The Debtors did not file the complaint in their turnover action until April 27, 2009,
when this banlauptcy case already was more than seven months old. They did not file their
summary judgment motion in that action until May 19, 2009, several weeks later, and
proceedings on that motion were delayed because of Debtors' initial refusal to provide their
affiant, Doreen Logan, for a deposition until after opposition papers had been filed.
DB02:8986649.1 7 067816.1001
P&A Agreement. The FDIC-Receiver is not at this time requesting relief from the automatic
stay to exercise setoff rights with respect to the Disputed Deposit Balances, nor is it the FDICReceiver's
burden on this Motion to establish a "probability of success on the merits" in that
future dispute, as the Debtors contend.6 Instead, the focus of the "cause" inquiry is on whether,
under the circumstances, the balance of hardships favors relief from the stay to permit the FDICReceiver
to exercise its indisputable rights under section 9.5 of the P&A Agreement. In re
Mu'min, 374 B.R. at 164 (in cause inquiry, "[a] court may consider the policies reflected in the
bankruptcy code, and the interests of the debtor, other creditors and any other interested
parties."). That standard is amply satisfied.
"Cause" is demonstrated by the Debtors' own statements in seeking summary judgment
in their turnover action before any discovery into numerous disputed issues of fact has been
conducted. Under section 542(b) of the Bankruptcy Code, turnover of a matured debt owed to
the debtor is not available "to the extent that such debt may be offset under section 553 of this
title against a claim against the debtor." 11 U.S.C. § 542(b). The Debtors do not dispute that the
FDIC-Receiver has claims against WMI, which are prima facie valid on the current state of the
record, but in seeking summary judgment they have urged the Court to disregard the FDICReceiver's
setoff rights solely because the FDIC-Receiver had not yet exercised its rights under
6 "Probability of success" is a factor in evaluating motions for stay relief to pursue
litigation outside of the bankruptcy court. See In re Continental Airlines, Inc., 152 B.R. 420, 425
(D. Del. 1993) ("[t]he third factor the Court must consider in assessing the propriety oflifting the
automatic stay is whether the movant has some probability of success on the merits in the
proposed litigation") (emphasis added); Save Power Ltd v. Pursuit Athletic Footwear (In re
Pursuit Athletic Footwear), 193 B.R. 713, 718 (Bankr. D. Del. 1996). The decision in In re WR.
Grace & Co., Inc., No. 01-01139, 2007 WL 1129170 (Bankr. D. Del. Apr. 13,2007), relied upon
by both the Debtors and the WMI Noteholders, involved precisely such a motion. Even where
this factor is applicable, however, the "required showing is very slight." Izzarelli v. Rexene
Prods. Co. (In re Rexene Prods. Co.), 141 B.R. 574, 578 (Bankr. D. Del. 1992). As discussed
further below, it is well satisfied here.
DB02:8986649.1 8 067816.1001
section 9.5 of the P&A Agreement. See Reply Brief in Support of the Motion of Plaintiffs for
Summary Judgment at 36-37 [D.1. 163]; Oct. 22, 2009 Hr'g Tr. at
75. If turnover of the
Disputed Deposit Balances is ordered (and those balances are transferred), there can be little
doubt that the Debtors will argue that the FDIC-Receiver's setoff rights thereby have been lost
irretrievably, even though the litigation of the parties' various disputes is still in its earliest
stages. Stay relief is warranted to protect the FDIC-Receiver against an inequitable result by
ensuring the preservation of the status quo and to prevent the Debtors' use of the automatic stay
as a sword to advance their litigation tactics.
On the other hand, granting relief from the automatic stay will impose no hardship on the
Debtors or their creditor constituencies. The relief requested will merely preserve the status quo
until the parties' disputes have been litigated to resolution. At that time, the Debtors will be
entitled to recover whatever portion of the Disputed Deposit Balances is rightfully theirs, if any,
after accounting for the competing rights and claims of the FDIC-Receiver and others. This is
precisely the relief provided to the Debtors under sections 542 and 553 of the Banlauptcy Code.7
See Strumpf, 516 U.S. at 20.
7 Contrary to the arguments of the WMI Noteholders, the FDIC-Receiver's potential
assertion of defenses in the future bears no weight in the analysis. There is no doubt that
litigation of the parties' disputes, including possible litigation concerning jurisdictional issues,
will need to be resolved before the parties' respective entitlement to the Disputed Deposit
Balances is finally determined. This is precisely the framework established by the Banlauptcy
Code. See 11 U.S.C. § 542(b). The efforts of the Debtors and the WMI Noteholders to lay claim
to the Disputed Deposit Balances before material disputed questions of fact can be scrutinized
provides no justification for denying the FDIC-Receiver's requested relief. The WMI
Noteholders' further objection to the FDIC-Receiver's proposal to maintain the Disputed Deposit
Balances in non-interest bearing accounts can be addressed, as necessary, in the form of order
granting that relief.
DB02:8986649.1 9 067816.1001
B. The FDIC-Receiver Has Valid Setoff Rights
The Debtors' bankruptcy law challenges to the FDIC-Receiver's setoff rights are equally
without merit.
First, there is mutuality now and there will be no triangular setoff created as a result of
the relief requested in the Motion. The FDIC-Receiver has its own claims against the Debtors, as
the Debtors acknowledge, and so does JPMC. On the other side of the equation, the Debtors
have asserted claims for the Disputed Deposit Balances against both the FDIC-Receiver (in
WMI's receivership proof of claim and in its D.C. complaint) and against JPMC (in proceedings
before this Court). The Debtors' own litigation positions establish mutuality at this stage of the
litigation regardless of the instant Motion. See Westinghouse Credit Corp. v. D 'Urso, 278 F.3d
138, 149 (2d Cir. 2002) (finding that debts are "mutual" when "they are due to and from the
same persons in the same capacity"). Under section 542(b), turnover is unavailable until the
parties' competing rights and claims have been resolved. See Strumpf, 516 U.S. at 20.
Nor does the P&A Agreement purport to override or alter the mutuality requirement of
section 553(a), as the Debtors argue. To the contrary, section 9.5 merely permits the FDICReceiver
to take responsibility for preexisting liability; it does not purport to alter the
requirements of the Bankruptcy Code. Section 9.5 is far different than the contractual setoff
provision that was at issue in the decision in In re SemCrude, L.P., 399 B.R. 388 (Banla. D. Del.
2009), cited by the Debtors. In SemCrude, a creditor argued that the setoff provision of a
prepetition contract with affiliated debtor entities allowed it to set off debts it owed to one debtor
against debts owed to it by other, affiliated debtors. Judge Shannon disagreed, concluding that
parties could not override the mutuality requirement of section 553(a) by private agreement. Id
at 396-97 ("[T]he Court concludes that mutuality cannot be supplied by a multi-party agreement
contemplating a triangular setoff") (emphasis added). Unlike the contract in Sem Crude ,
DB02:8986649.1 10 067816.1001
however, nothing in section 9.5 of the P&A Agreement contemplates a triangular setoff, and
SemCrude did not address a provision under which one party to a contract could take back a debt
it owed to a debtor that had been assumed by another party under that contract.
Second, section 553(a)(3) of the Bankruptcy Code does not prohibit the relief requested
in the Motion. The objectors' construction disregards the actual language of section 553(a)(3),
and no case cited by either the Debtors or the WMI Noteholders applied the provision in the
manner advocated in their objections.
Section 553(a)(3) provides that "this title does not affect any right of a creditor to offset a
mutual debt owing by such creditor to the debtor that arose before the commencement of the case
under this title against a claim of such creditor against the debtor that arose before the
commencement of the case, except to the extent that . . . the debt owed to the debtor by such
creditor was incurred by such creditor - after 90 days before the date of the filing of the petition
... for the purpose of obtaining a right of setoff against the debtor .... " 11 U.S.C. § 553(a)(3)
(emphasis added).
This provision is "designed to prevent a bank from undertaldng a build-up of the debtor's
account in order to secure a preference." Sherman v. First City Bank of Dallas (In re United
Sciences of America, Inc.), 893 F.2d 720, 725 (5th Cir. 1990). "[T]he archetypal situation is the
case where a debtor has a preexisting obligation to the creditor, and, in the months prior to the
debtor's filing for bankruptcy, the debtor pays back the creditor by 'loaning' him money. Later
the parties notice the two debts and engage in setoff, canceling both of them. In this archetypal
situation, the creditor obtains the debt only to engage in setoff, thus this 'loan' is disfavored by
the setoff rules." Howell v. Bank of Newnan (In re Summit Fin. Servs.), 240 B.R. 105, 120
DB02:8986649.1 11 067816.1 00 1
(Banla. N.D. Ga. 1999) (citing Woodrum v. Ford Motor Credit Co. (In re Dillard Ford, Inc.),
940 F.2d 1507, 1513 (11 th Cir.), reh 'g denied, 851 F.2d 366 (11th Cir. 1991)).
The cases cited by the Debtors themselves establish that section 553(a)(3) has no
application when a debt owed to a debtor was incurred by the creditor in good faith and in the
ordinary course of business. See Obj. at 14 (citing NY. County Nat 'I Bank v. Massey, 192 U.S.
138 (1904) (allowing setoff of deposits made in the days preceding banIauptcy petition);
Huisinga v. Nat'l Bank of Waterloo (In re Bohlen Enters., Ltd), 78 B.R. 556, 560-61 (BanIa
N.D. Iowa 1987) (finding section 553(a)(3) inapplicable if deposits are "accepted in good faith in
the ordinary course of business"). The alleged debt at issue here was "incurred" by WMB (at a
time when it was controlled by WMI), not by the FDIC-Receiver, and the Debtors have argued
strenuously in their turnover action that the debt was incurred in the ordinary course of WMB' s
business. See Turnover Compi. ~ 22 ("Each of the Accounts was established and maintained in
accordance with internal policies and procedures of WMI and its subsidiaries governing 'On-
Us,' or intracorporate, deposit accounts."); Oct. 22, 2009 Hr'g Tr. at 10-12. Whether those
assertions will be supported when the matters have been litigated to conclusion remains to be
seen, but WMI cannot have it both ways in that litigation. 8
The Debtors' effort to read into section 553(a)(3) a restriction on post-petition
reassignment of debt that is not provided for in the plain language of the statute must also be
rejected. In drafting section 553(a)(3), Congress expressly chose not to include such a
restriction, even though it had done so in the neighboring provision governing post-petition
transfer of claims. See 11 U.S.C. § 553(a)(2) (prohibiting setoff based on a "claim" that "was
8 The FDIC-Receiver reiterates its prior reservation of all arguments set forth in
opposition to the Debtors' motion for summary judgment in the turnover proceeding, none of
which are conceded.
DB02:8986649.1 12 067816.1001
transferred by an entity other than the debtor, to such creditor (A) after the commencement of
the case; or (B)(i) after 90 days before the date of filing of the petition; and (ii) while the debtor
was insolvent .... "). The omission of similar language in section 553(a)(3) entirely refutes the
Debtors' argument here. See, e.g., Russello v. United States, 464 U.S. 16, 23 (1983) ("[Where]
Congress includes particular language in one section of a statute but omits it in another section of
the same Act, it is generally presumed that Congress acts intentionally and purposely in the
disparate inclusion or exclusion."). None of the cases cited by the Debtors applied section
553(a)(3) to prohibit setoff by a creditor who took responsibility for a pre-existing debt that the
debtor itself asserts was incurred in the ordinary course of business.
Finally, the Debtors do not challenge the basis for the FDIC-Receiver's setoff rights
under nonbankruptcy law with respect to the Disputed Deposit Balances, which section 553
expressly preserves. In that regard, even if the scope of the FDIC-Receiver's statutory setoff
rights under 12 U.S.C. § 1822( d) is limited, the FDIC-Receiver unquestionably also holds
common law bankers' setoff rights up to the full amount of those balances, as confirmed in
WMB's standard terms and conditions for business accounts, which the Debtors have not
challenged. 9
C. The Status of the 4234 Account Is Subject to Numerous
Disputed Issues of Fact
The Debtors' final assertion is that the balances held in the so-called 4234 account are
beyond the reach of section 9.5 of the P&A Agreement because that account allegedly was held
at WMB fsb rather than at WMB. Obj. at 17-19. As an initial matter, this argument implicitly
admits that the balances in the other four accounts, all indisputably held byWMB, are subject to
9 The Debtors are correct that the Transaction Account Guarantee Program was not
adopted until after the Debtors' petition date. The FDIC-Receiver's citation to a regulation
implementing that program was mistaken.
DB02:8986649.1 13 067816.1001
section 9.5. The Debtors allege in their turnover complaint that the balances in those four
accounts amount to at least $317,420,836. CompI. ~ 19.
The remainder of the Debtors' argument in this regard merely underscores the significant
factual issues that exist and must be addressed through discovery before the parties' respective
rights and obligations can be resolved. For example, the Debtors argue that "the FDIC makes no
assertion that the books and records of WMB and/or WMB fsb do not reflect that the [4234]
Account was established and due and owing as the Debtors have asserted .... " Obj. ~ 30. Of
course, the FDIC-Receiver has not yet had the opportunity to conduct discovery into this issue,
including depositions of the personnel who were responsible for maintaining those books and
records, and the onus cannot be placed on the FDIC-Receiver to prove that negative under those
circumstances.
In any event, the FDIC-Receiver has shown that the account statements for that accountwhich
the Debtors themselves presented to this Court in their premature summary judgment
motion were issued by WMB, and not by WMB fsb. Not surprisingly, the Debtors have no
factual response. Instead, they devote a lengthy paragraph to fanciful speculation about the
possible reasons why their own account statements contradict their claim that the 4234 account
was moved to WMB fsb. Here, at a minimum, is another issue on which discovery will be
necessary.
Finally, the evidence advanced in opposition to the Debtors' summary judgment motion
strongly suggests that the attempt to transfer the balance held in the 4234 account, which by the
Debtors' own admission occurred in the waning days of WMB's existence while it was
experiencing deposit outflows that ultimately amounted to $16.7 billion over a ten-day period,
was motivated by an intent to hinder, delay or defraud WMB, its creditors or the FDIC as its
DB02:8986649.1 14 067816.1001
receiver, including by attempting to interfere with setoff rights of WMB or the FDIC-Receiver.
Even if discovery were to show that the attempted transfer was successful, therefore (which is
subject to material doubt), that transfer would be avoidable under applicable law.
The relief sought in the Motion merely seeks to preserve the status quo until these
substantial issues of fact can be determined. lO See Strumpf, 516 U.S. at 20 (finding
administrative hold on deposit account pending determination of setoff rights through litigation
complied with sections 542(b) and 553(a) of the Bankruptcy Code and was not a violation of the
automatic stay); Gross, 974 F.2d at 408 (finding that the bank's conservator acted within its
authority in directing assuming bank to withhold deposit balances pursuant to provision of
purchase and assumption agreement pending completion of the bank conservator's investigation
into depositors' potential liability for bank's failure). In the Motion, the FDIC-Receiver does not
seek to exercise setoff rights but only to exercise its rights under section 9.5 of the P&A
Agreement to preserve the status quo. Once that has occurred, there will be sufficient time for
the parties to conduct discovery and litigate these and many other disputed issues of fact to
resolution.
III. THE FDIC-RECEIVER HAS NOT CONCEDED ANY DISPUTED ISSUE IN
SEEKING RELIEF FROM THE AUTOMATIC STAY
The Debtors are simply wrong in their assertion that the FDIC-Receiver has conceded
any contested issue with respect to their summary judgment motion by filing the Motion. First,
10 The Debtors' assertion that 11 U.S.C. § 502(d) somehow prevents the relief requested
is also wrong. As with many of the Debtors' other arguments, that assertion is predicated on the
mistaken notion that the FDIC-Receiver is seeking authority now to exercise setoff rights, when
in fact the Motion merely seeks to preserve those setoff rights in the face of the Debtors'
inappropriate turnover motion. In any event, section 502(d) only "should be used to disallow a
claim after the entity is first adjudged liable; otherwise, the court could not determine if the
exception applies ... " Holloway v. IR.S. (In re Odom Antennas, Inc.), 340 F.3d 705, 708 (8th
Cir. 2003) (emphasis added); see also Mktg. Res. Int'l v. PTC Corp. (In re Mktg. Res. Int'l
Corp.), 35 B.R. 353, 356 (Bankr. E.D. Pa. 1984).
0802:8986649.1 15 067816.1001
the Motion expressly states otherwise. See Motion at 11 n.7. Second, under section 9.5 of the
P&A Agreement, the FDIC-Receiver may direct JPMC to withhold and return a "deposit
balance" for a number of reasons, including expressly because it has determined that "all or any
portion" of such balance "does not constitute a 'Deposit.'" See P&A Agreement § 9.5. It is
therefore another fallacy that "y definition" the Motion concedes that the Disputed Deposit
Balances are deposits, as the Debtors assert. See Obj. ~ 1. Finally, the Motion does not in any
way represent a concession that JPMC does not have its own setoff rights with respect to the
Disputed Deposit Balances. It was the Debtors who argued that the FDIC-Receiver's substantial
rights could be ignored in the Debtors' headlong rush to obtain turnover of the Disputed Deposit
Balances. JPMC agreed in the P&A Agreement that the FDIC-Receiver retained the right to
protect its interests in such a circumstance, even if JPMC also had its own setoff rights, as it
does.
DB02:8986649.1 16 067816.1 00 1
CONCLUSION
For the foregoing reasons, and for the reasons set forth in the Motion, the FDIC-Receiver
respectfully requests that the Court grant the Motion and enter an order pursuant to 11 U.S.C.
§ 362(d) in the form submitted with the Motion modifying the automatic stay to allow the FDICReceiver
to exercise its rights under section 9.5 of the P&A Agreement with respect to the
Disputed Deposit Balances.
Dated: Wilmington, Delaware
December 1, 2009
DB02:8986649.1 17
YOUNGCONAWAYSTARGATT
& TAYLOR, LLP"
So when is the trial going to be regarding the transfer of the funds to "the deposit" account ?????
Arguments on December 18th and a trial on January ....??????
JPM has actually had much more than $16 billion withdrawn over the past year (check their slideshows), and I'm fairly certain that most of that money was withdrawn by former WaMu customers, but that is neither here nor there. When a company actually has cash reserves, they can absorb losses and massive withdrawals.
: ^ )
Yes, it does say that, however, the following quotes are all the OTS needed to say to justify the seizure. This does not justify the price at which the FDIC sold the assets for, but nonetheless, there is no recourse that can be taken from an "unjustified seizure" perspective.
"Deposit Outflows – Since July 2008, the pressure on WMB increased as market
conditions continued to worsen. Significant deposit outflows began on September
15, 2008. During the next eight business days, WMB deposit outflows totaled $16.7
billion, shortening the time available to augment capital, improve liquidity, or find an
equity partner. Given the Bank’s limited sources of funds and significant deposit
outflows, it was highly likely to be unable to pay its obligations and meet its
operating liquidity needs.
Receivership - With insufficient liquidity to meet its obligations, WMB was in an
unsafe and unsound condition to transact business. OTS placed WMB into
receivership on September 25, 2008."
There is no doubt that the sales price will be adjusted, and when that happens, the bank creditors will be smiling.
: ^ )
Don't be surprised. It's the way it is. There were others that had similar restrictions in place, and per billing statements, there have been several requests to have the restrictions removed.
Claiming NOLs is not affected by receiving TARP. The ability to carryback NOLs 5-years is affected by receiving TARP.
Claiming NOLs is not the same as carrying back NOLs 5 years.
If a company had say $16 billion in NOLs and that company received TARP funds, that does not mean that the company loses the $16 billion in NOLs, and someone who has worked with tax law for years would know this.
The AMOUNT of NOLs is not increased or decreased depending on whether or not a company took TARP funds, and the AMOUNT of NOLs has absolutely nothing to do with TARP or the new legislation. The amount of the NOLs is the amount of the NOLs. What one can do with the NOLs is what is affected by the legislation.