Some Interesting Posts By vivianbalbo...; marymbobh; bopfan; and matt2216 on The Y Board:
vivianbalbo...
I'm Blown Away by WMI Response to FDIC 12-Nov-09 02:19 am.
Thanks to Rover and Ghost for highlighting WMI's latest response to FDIC's request for relief from the stay previously imposed in the BK case. All SINCERE longs should read this brief carefully. I know it's 26 pages of very dense legal argument, but it is brilliant, devastating and full of positive implications for WAMU longs. I would really love to hear Bop's insights on these developments.
See http://www.ghostofwamu.com/documents/08-...
Caveat: It's 10 p.m. PST, I've just returned from a 500-mile drive and 5 days of fun-in-the-sun and surfing in San Diego, and have a couple of scotches under my belt, so I'm not really not in a position for incisive comment here (nlu55 isn't the only one who has a nightcap), but allow me to observe:
(1) This response to FDIC is subtle and yet overwhelmingly correct on so many different levels. One begins to see wheels-within-wheels in WMI's previous legal strategy. It's almost as if, a year ago, WMI was beginning to set up FDIC and JPM for this point, today.
(2) The argument about WMBfsb (which holds almost all of WMI's $4B disputed deposits) having passed (obviously) to JPM OUTSIDE OF the FDIC receivership makes one conclude that that is precisely why, sensing the possible FDIC takeover move in Sept. 2008, Weil (who was already retained by WMI) counseled WMI to move its deposits to the "little bank" (fsb) in order to stymie the FDIC and JPM, and protect those legitimate deposits.
(3) Weil & its co-counsel (Richards, Layton & Finger and Elliott Greenleaf, and Quinn Emanuel) saw the FDIC's 9.5 argument coming a LONG time ago and were totally prepared, ready, and loaded for bear when it came. There is no way that they could have gotten such a thorough, authoritative, and densely documented brief together so quickly unless it was already anticipated. This team is the best!
(4) On page 20 (note the bold-faced, italicized passage) and page 22 (noting the FDIC's "newly-minted threat to reverse course and do what it aid it wouldn't do . . .") WMI's attorneys are really amping up the rhetoric and high-lighting the FDIC's hypocrisy and its transparent collusion with JPM to make a mockery of the bankruptcy court by "unseemingly gamesmanship". This cannot but help make THJMW incensed at both JPM and FDIC.
(5) In making it's argument for relief from the stay order, FDIC has totally undermined its argument against the motion for summary judgment.
Rover and others on other threads today have made other pertinent observations, with which I concur. But beyond those, I see this brief as a tipping point, where WMI has thrown down a gauntlet, of sorts. Now that the procedural niceties of "due process of law" have been satisfied, I expect Judge Walrath to deny the FDIC's request to lift the stay in short order and to grant the motion for summary judgment soon thereafter.
IMHO . . . GLTA
Sentiment : Hold
vivianbalbo...
July MOR shows $4BB issue resolution needed 29-Aug-09 07:11 pm
I'm no accountant, but reviewing the July 31st MOR statement posted on kccllc, the numbers underscore why resolution of the $4 billion deposit account issue is important for both the short and long term: In short, WMI is spending a lot more money (mainly on lawyers) than it is taking in. I'm not trying to create anxiety here, just throwing out information which may be instructive.
While WMI shows $2,178,000 in receipts for July, $650,000 of that is listed as "interest" on the JPM deposit accounts, and that begs the question of whether JPM is actually paying out that interest or if it's just on paper. Also, the vast majority of the "receipts" are the $1,500,000 listed as "interest and investment returns" from a B of A bank account with an opening balance of only $3,800,000, meaning to me that stocks or other assets in that account were sold and withdrawn during the month, as it obviously couldn't just be bank interest.
But that's not the whole story: They show $3,638,000 in actual disbursements for July, almost all for lawyers and litigation services, almost twice the "receipts" for the month. And, even then, it appears that not all the lawyers are actually being paid in a timely fashion. Looking at page 5, Weil, Alvarez & Marshall, and some of the smaller firms weren't paid anything at all in July. (As you know, BK lawyers can't get paid unless and until they submit a detailed billing to the court and get court approval for the bankrupt estate to pay it.) And on page 12 there is a listing of accounts payable totaling $6.7 million, with $1 million owed to Quinn and $2.8 million owed to A & M. (Interestingly, Quinn is not even on this list, which means to me that they haven't yet submitted a bill.) Elsewhere, a total of "professional fees" cumulative-to-date is listed as $53 million, which comes to about $5 million per month of "money burn" for lawyers since BK was filed.
Although in the long run the above facts shouldn't make any difference (and I'm sure our Masters-of-the-Universe lawyers are worth the up to $950 per hour they charge), in the short run it appears to mean WMI will have liquidity problems until it can actually get its hands on the $4 billion. This also provides a strong motive for why JPM has been blustering and prevaricating to delay resolution of the issue: JPM is hoping it can strangle WMI financially and thereby impede its will to fight on the other issues. Why agree to give your adversary a huge war chest to use against you if maybe you can wear them down?
This also may explain in part why Weil, A & M and Quinn haven't filed any billing statements with the BK court lately: They've agreed to defer payment until the $4 billion issue is resolved, and have no reason to file detailed statements with the court when the estate doesn't have enough current liquid funds to pay them anyway.
The positive flip side of this is that it indicates a real confidence on the part of our lawyers as to the ultimate outcome of the litigation, which will result in payment to them in full. Understand that bankruptcy attorneys traditionally to NOT get paid on a contingent basis, i.e., they're not like personal injury attorneys who get a percentage (usually around 30%) of the judgment. BK lawyers get paid on an hourly basis, as authorized by the court.
So, to me, although the $4 billion will hopefully be just a large drop in the bucket in the long term, winning this issue ASAP is very important to the overall strategy.
JMHO. Any thoughts?
marymbobh:
Countdown to Summary Judgment 13-Nov-09 11:17 am
Everyone is wondering when the bankruptcy court will give its decision on WAMUQ's Motion for Summary Judgment for the turnover of the $4 billion. The importance of this decision is significant. If WAMUQ wins, it would mean that the court agrees that they had $4 billion in cash at the time that WMB bank was seized and placed into receivership. That would be a big help for WAMUQ in their case against the FDIC in DC Court. Also, WAMUQ would have a warchest of $4 billion in cash which would be far more than needed to sustain all of the litigation through to the ultimate bitter end and terminate JPM's and the FDIC's war against the banking system. So...when will the decision happen? Based on past decisions, it should happen before Thanksgiving which is 11/26. And...the judge will probably want to get it out before the 11/24 hearing. So...my prediction (just for the fun of it) is that the opinion will come out on the friday before the hearing...which would be November 20.
Sentiment : Buy
bopfan
Clarke's Silly, Empty Threat 23-Oct-09 08:33 pm
A number of people were unnerved by John Clarke's threat to compel JPM to give the FDIC the $3.7 billion. There is no reason for any concern.
A debtor's estate consists of "ALL legal OR equitable interests of the debtor in property" as of the commencement of the case. Section 541(a). http://www.law.cornell.edu/uscode/usc_se... Congress made this very broad description of estate property for a reason: to prevent creditors from claiming that property in question doesn't come within the definition of Section 541. As you can see, any conceivable type of property is covered by Congress' definition, including bank deposits.
Property of a bankruptcy estate cannot be interfered with absent court order. See Section 362(a)(3). http://www.law.cornell.edu/uscode/usc_se... Moreover, that protection is in effect until, among other things, (1) the property is no longer property of the estate (362(c)(1)), or (2) the case is dismissed (362(c)(3)), which is what many of us expect will happen in a settlement.
The writings and depositions WMI has submitted to the court are compelling evidence that the money belongs to WMI, though the court has not ruled on the matter. This evidence is enough to trigger the protection of Sections 362 and 541 -- and Clarke knows it.
The only thing that could override the protections in Sections 362 and 541 would be a FIRREA provision placing authority to adjudicate the money in the hands of the D.C. district court, notwithstanding Chapter 11. Such a provision only exists in the FDIC's dreams, because if it existed Clarke et al. would have cited it in neon lights.
As there is no such provision, Clarke wouldn't dare tell the FDIC to compel JPM to turnover the money (JPM wouldn't do it anyway for fear of violating the automatic stay).
Every lawyer in the courtroom knew that Clarke was making a fool of himself, and the only people who were frightened were some lay people on this board and day traders fearful the FDIC could drag things out. While the latter is certainly true, both JPM and the FDIC know they can't move that money without Judge Walrath's consent, and from what I know about this case that isn't forthcoming.
Rating :
matt2216
Bop a question about Re-org... 12-Nov-09 12:06 pm
From the latest filing:
The recent amendments to the Bankruptcy Code impose a hard deadline of March 10,2010 on the Debtors' exclusive period to file a chapter 11 plan. If the Debtors recover the Deposits from JPMC, they will be well-positioned to file a plan in advance of their exclusivity deadline. Without the Deposits, however, the Debtors will not be able to construct a viable plan beneficial to their creditors.
The question is this: I know that exclusivity is essential for the debtors to stay in control of their future. Will they be able to put together a viable plan with the litigation still outstanding? Doesn't this mean that the litigation, claims, etc. need to be wrapped up by this date or can the debtors somehow get an extension if these issues are still outstanding? Can the plan include coming out of bankruptcy at some point in time in the future when the litigation is settled (in other words have an unexecuted plan just as long as the plan is in place to satisfy this requirement of the 18 month deadline?)
Thanks for your help.
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