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AZ, wow! This is proof that 75/25 does not apply to bankruptcy remote assets outside of LT. Again, why maintain the trust assets information backing the original preferred shares with the class 19 escrow markers? This supports my suspicion on why keeping separate class 19 and 22 escrow markers destroys any logical reasoning behind 75/25 to the end theory.
If POR7 truly nullified all prospectus for commons and preferred, and the intent was for 75/25 liquidation to the end, then only one escrow class would have been issued - and the number of markers for that escrow class split 75/25 between the releasing preferred and commons.
This was the slight of hand trick. If the judge could have addressed the bankruptcy remote assets, she could have done exactly like you suggested - keep APR in force and pay everyone until commons is reached.
However, she couldnt legally address the bankruptcy remote assets but she knew that there were more than enough to reach commons.
She needed some sort of way to keep commons around past POR7. So she approved the 75/25 plan to split whatever is left in the LT.
Heres the slight of hand. She assigned two separate escrow classes, 19 and 22, to keep track of whose who. This way, after the LT assets are gone and bankruptcy remote assets return, they will return with APR in force.
If she truly wanted to split everything 75/25, including bankruptcy remote assets, then she would have assigned one escrow class for both commons and preferred, and split the number of markers of that one class 75/25 between commons and preferred. That way, there is no distinguishing between commons and preferred post POR7 - you will get your 75/25 based on how many markers of the one common escrow class you owned.
AZ, do the class 19 markers have an associated interest rate listed with the markers?
AZ, I think you nailed it.
1) Safe harbored assets were remote bankruptcy - so judge cannot address it in court
2) Equity team must have brought some sealed evidence to judge , "look at all these ABS in remote bankruptcy"
3)judge knew that she needed to include commons at the end of waterfall without openly addressing in court the various remote bankruptcy assets
4) so she threatened the hedgies with insider trading charges to include the 75/25 split for WMIH. everyone in the room knew that the big prize lies in remote bankruptcy trusts...so they agree to 75/25 grudgingly knowing that it is just a small part of final returns.
5) separate classes of 19 and 22 were issued for preferred and commons...allowing the markers to keep track of whose who after the LT distribute the remaining assets in LT 75/25.
6) Speculation: in open court they made it sound like 75/25 is to the end while I speculate that the hedgies loaded up in commons while telling retail to sell theirs to buy preferreds
LG, I'll agree with you that no one knows 100% for sure how the 75/25 issue will play out. I think the LT language on the subject was designed to be opaque on purpose. I have my speculation as you do. We will all get paid extremely well regardless of the final 75/25 outcome and I dont mean to disrespect anyone...I'm just bringing up logical clues to support my suspicion but I'm not claiming to know 100%
LG, I think the interest rates on the preferreds building from 2008 till now could be a possibility. So preferreds might get face plus interest due till now. In terms of Wampq conversion rights into commons, maybe that can still be enforced if final common escrow ends up getting enough to make that conversion profitable... or maybe the conversion rights have expired by now. That I'm not too sure of.
All I know is that it is highly likely there is a reason behind maintaining separate class 19 and 22. If 75/25 for everything, then no need for separate classes of escrow.
Again, none of us are 100% sure. I'm just presenting the "logical" reasoning behind my speculation on why 75/25 does not likely apply to any bankruptcy remote assets.
LG, you still have not provided a logical explanation to "why" issue separate escrow markers 19 and 22 if 75/25 split to the end. You yourself stated that all the old prospectus for preferred and commons were cancelled and void...
So why set up class 19 and 22 markers distinguishing different classes for preferred and commons who released?
If the objective is to nullify all the old prospectus and split all returning assets 75/25 to the end, then the logical action would be to issue one class of escrow markers and split the markers 75/25 to the releasing old preferred and commons. So that one class of marker guarantees that the old prospectus of preferred and commons were nullified and the returning assets dont care if you are old preferred or commons - one class of marker would guarantee 75/25 split for everything to the end.
I highly doubt the estate issued separate classes of class 19 and 22 just because they can... there is a reason why they maintained separate identity for releasing preferred and common classes. If there is no distinguishing need, and all they want is 75/25 split to the end, then they would have just issued one class of escrow and split the markers 75/25...just like they did for the initial issue of WMIH common stock.
LG, no one has posted a "logical" explanation on this board on why separate classes of escrow markers were issued if 75/25 split to the end is the case. Just like there were only one class of WMIH stocks issued 75/25 in 2012, logic would dictate that only one class of escrow markers should have been issued spkit 75/25 if the final distribution is 75/25 to the end. There is no logical purpose to issue separate classes of escrow if the 75/25 split applied to everything (remote bankruptcy assets included).
If someone can come up with a logical explanation then I will congratulate them and accept that possibolity. As of now, I think AZ's theory of 75/25 split only applying to LT assets (not including safe harbored remote bankruptcy assets) makes a lot more logical sense with having separate class 19 and 22 markers.
AZ, it always perplexed me why there were even a class 19 and a 22 assigned if everything remaining were to be split 75/25 to the end. Why maintain 2 separate escrow classes if this were true. Why not just have one class and split the markers evenly 75/25 in 2012. Why go through all that trouble of having separate markers?
I agree with you. I think it is likely that 75/25 only applies to what is left in the LT. Back in 2008-2012 I wasnt sure. So I just followed what Mike Willingham had and loaded up only on commons. I hope I picked the right horse.
AZ, this is my worry. Can FDIC be released without the conclusion of various Libor lawsuits on our behalf?
Thanks AZ. I hope the distribution happens before end of march and it comes as qualified dividends. What is your speculation? Will it come back as ordinary or qualified dividends? Are those remote trusts tax exempt corporations?
Tax implications for escrow windfall:
Disclaimer: this is not a professional advice. Consult with your tax attorney.
If escrow windfall gets returned to us as either qualified dividend or long term capital gain, then you should consider quitting your job early in the year to reduce your taxable income tax for the year. That way you might qualify for the lower 0% or 15% capital gain tax rate for your windfall.
Again, consult with your tax attorney if such a windfall happens early enough in the year.
Jerry, are they qualified dividends or ordinary dividends? If qualified dividends then you still qualify for ththe capital gains tax rate.
If escrow distribution comes from a tax exempt corp, then it will be considered ordinary dividends. I believe this may be the case for us.
I'm sorry to hear that. I hope escrow payout will arrive shortly to lessen the blow.
RD, I also suspect that when they do release escrow money, there will not be any pre announcement..just like the PIERS final LTI payment on Monday morning. I think we may just see money in our accounts one morning without any heads up.
AZ, I doubt the employees are getting zero to coorporate with the LT to be used as a delaying mechanism. I doubt they would have olayed along all these years only to end up paying their own attorney fees at the end.
It will be interesting to know if any of these employees own large amount of escrow markers...especially markers based on shares they acquired after bankruptcy filing in 2008.
It would be nice if we could petitio the court to have them disclose...but I doubt that is possible.
What are your thoughts on this? Do you think the employees were just playing along with LT all this time? Is there a conspiracy here?
AZ, the deliberate 'timing' was very obvious. It seems like they already knew EC will not appeal from the start because they must have spent the last 3 weeks preparing for the final LTI payout to PIERS because they had that ready to go out first thing on Monday morning right after the appeal period expired on Friday night...why not announce something like "since the appeal just expired, we are preparing LTI payment to go out in a week.."
So I think the fact that the LTI payment went out first thing Monday morning means they must have been preparing it during the 3 weeks of appeal stay...as if they were 100% sure that there would be no appeal...like it was planned...and, they seem to be in a rush to get this done with the immediate PIERS payoff after.
So, I'm really hopeful that we might hear significant announcement before March 7th - before Coop Earnings.
AZ, do you suppose the LT delayed this payout from 4th quater last year to 1st quater this year to give the hedgies a whole year to deal with the tax consequences of the windfall? or to give them a stellar return in the beginning of the year so they can raise more cash under higher fees?
AZ, I agree with you on LTI. I contacted LT last year to see if I needed to update my new address for their file. They told me I only needed to keep my address with my brokerage that held my escrow markers. Issuing LTI to all the common holders would be expensive and I dont think they are planning on doing so from the response they gave me. There must be a mechanism for them to distribute whatever is left in the LT directly through the escrow markers without LTI. Also, I think the safe harbored assets may not "pass through" the LT. If such happened, the LT may be legally liable for the manner in which they have denied the existence of bankruptcy remote assets all these years and also their confusing language on the 75/25 issue.
In order to truly separate the LT from disclosure liabilities, I think there must be a mechanism to directly flow the safe harbored assets from the bankruptcy remote trusts to our escrow markers and bypass the LT all together.
AZ, I hope you will receive a notice of distribution for class 17 this week. Wow, I couldnt believe how fast they moved on with that special distribution to finish of PIERS. Maybe they will try to finish this off in a month!
Good morning AZ. I hope you havent said anything in the last few days because you were having a mini pre-celebration due to no appeal. Now that the appeal has timed out, and since you've mentioned that the remote bankruptcy assets may not need to flow back through the LT, do you suppose we might hear an announcement from the remote trusts next week or do you think they might need to wait until after PIERS has received their last check or LT announces final bankruptcy conclusion?
31 hours and 12 min to go
Feels like I'm in a sub waiting for the dept chargers to go off
Thanks Ron, I understand the inference that you are making. I hope you are right about the CIC having occured. I hope to see an 8k from Coop shortly after the 22nd.
Thank you for the links Ron. It looks like they just wanted to address whether CIC has occured for the employee claims. It doesnt specifically state that CIC needed to be complete on Feb 5th. The EC hearing just wanted to address whether CIC has occured prior to discussing their claims. But this is moot now that the judge has already theown put EC.
Ron, do you have a link to any document stating the 5th was the deadline for CIC?
Ron, wouldnt loss of NOL be a significant material event to warrant an 8k filing?
AZ, yes I understand that class 17 has its own supporting trust. I guess my suspicion is due to the fact that they were assigned a "Class" 17. If they are not the responsibility of LT, and they never sued WMI, my question is what bankruptcy mechanism allowed them to have a "Class" 17?
Thanks AZ. I know class 17 is not the responsibility of LT...but if there is no EC appeal by Friday, are you 100% sure that the LT cannot use class 17 as an excuse to address the equity classes next? Are there absolutely no legal loopholes they can use to not address escrow classes next?
Ron, do you know if the appeal deadline is COB 21st or 22nd? I hope they'll announce PIERS payoff on the 22nd...but I have a feeling they might wait until mid next week to announce.
Anyone have the feeling this whole 21 day wait has been perfectly set up for a March 1st final payout to PIERS? Which also happens to be a Friday...
I'm offering that McLaren in all due respect. I'm not disrespecting your contribution or anyone elses here. I would love you to be correct because I will have a HHHHLCE if it happens. I'd be happy with HLCE at $50B return. I'd be very happy with HHLCE with $50B plus no 75/25 to the end. But I would be Tom Cruise jumping like a Leprechaun on Oprah's couch ecstatic HHHHLCE at $100B+ and no 75/25 to the end.
I dont think I am THAT Lucky...but I will secretly root for you to be right. If you are I will buy you a McLaren. Seriously, I hope you are right.
Lodas, I'm not disputing that JPM got away with paying peanuts for WMB. I'm just saying that it is very improbable that they will somehow compensate us for fair value after 10 years. Even if JPM did plan on doing that, they would need to file an 8k to inform their investors...
However, I'm also saying that they didnt get the crown jewels of Wamu during the robbery. I believe the crown jewel of our beloved s&l lies in those ABS/MBS securities that generated $9B a year interest profit. And there is actually a legal mechanism that makes it very probable that those securities are protected in remote bankruptcy trusts.
So let us be realistic while we await for our escrow returns. I'm not giving up on HLCE. $40B to $80B possibility...$50B very probable
JPM got away with the robbery during 2008 because Sheila Blair panicked and there was confusion and chaos everywhere. During nominal times like today multiple public companies would not get away with raising billions of dollars to pay off a common liability without an 8k. Maybe one company, but not multiple. Especially if all that money is earmarked to WMI.
Likely unrelated because all of those banks are public companies. They would be required to file 8k if they were raising billions of dollars to pay off a potential liability.
Unrelated. Probably directed by FDIC to increase liquidity for upcoming interest rate hikes
If JPM was on the hook to pay more for WMB purchase, it would be a material event and they would have filed an 8K on the potential liability years ago.
Also, no one ever investigated why Sheila Blair was caught on her knees in front of Jamie Dimon with a face full of...
People should give up hope on Rico or some 363 sale. JPM is not paying one cent more for WMB. The only potential money from JPM is through the FDIC LIBOR lawsuit....Remember how we were made bitches of Sheila Blair?? Yeah, I dont expect much from LIBOR lawsuit either.
The only potential saving grace in all of this is if WMI protected most of their security holdings (ABS/MBS) in remote bankruptcy trusts. As far as securitization laws, this is most likely as WMB could not hold them as the originator of the loans that backed these securities. As the originating bank, they could only participate in servicing. So any retained interests in these securities, would have to be held under the parent WMI or its subsidiaries.
But that saving grace is not small potato. In my opinion those retained interests in those securities accounted for moat of the valuation of Wamu as a "Savings & Loans". So Dr A's estimation of $86B is still possible. I personally think $50B is probabale but I'm hopeful for $80B.
I agree with you that it wont be hundreds of billions but 10s of billions is very likely. Remember, WMI reported something like $9B in interest profits for 2007. So if all those securities are left intact under WMI (securtity laws prohibits WMB from owning the securities backed by loans it originates..it can only service) it is possible to see somewhere between $40B and $80B after 10 years of interest profits. Remember Dr. A that estimated $86B in court. I believe his analysis was based on the liquidation value of these securities. It wasnt based on how much JPM should have paid for WMB.
Also, didnt Team Bonderman own something like 300 million shares? So essentially, big money will get at least 1/4 of all returns coming back to common escrow. I wouldnt doubt a much higher percentage if you count the common positions of the other hedge funds.
Ron, I'd be happy with just all the ABS/MBS certs left intact under WMI remote bankruptcy trusts. I've given up on receiving anything back for WMB robbery. If LIBOR pays out, I have a feeling it wont reach us. Remember, AIG won their lawsuit against the government for illegal taking and yet they were awarded zero due to "national security" excuse
That being said, if all the securities were left intact and not gifted to JPM, there is a very good chance of $50B return...and a decent hopeful return of $80B. I think a lot us would be HLCE with that.
Lets just all pray for some disclosure soon after next Friday. I just hate wasting away waiting under the deafening silence.
Jerry, if all of the securities that the parent WMI owned were left intact in the various bankruptcy remote trusts and had not been gifted to JPM.... I think the following estimated returns vs. probability is realistic.
$10B. 99.9%
$20B. 95%
$30B. 80%
$40B. 70%
$50B. 50%
$80B. 33%
$100B. 5%
Maybe through the Libor lawsuit but I doubt Jamie will pay one cent more for the sale of WMB.