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ItsMyOption, have you had any response to this email? TIA
Thanks Doc, it will be interesting to see what happens after the 26th. Maybe they will disclose some bankruptcy remote assets.
Thank you wamugold. Are you expecting anymore bankruptcy remote assets or are you guys left with NOLs only? How much are the remaining creditor classes owed?
I dont think Kosturos is "managing" the assets in the various SPVs in safe harbor. Those are managed by the independent trustees of the various SPV trusts. I believe all Kosturos is doing is accounting the distribution returns from those various trusts for WMI as one of the beneficiaries of those trusts.
Thank you Doc. Did the shareholders get escrow markers similar to Wamu?
Does anyone know if original Lehman shareholders got anything at the end? I havent kept up with their case over the years.
NoI believe there are escrow markers associated with the shares held in dispute account. They could be awarded with the those.
I dont think so, the original disputed reserved shares came from common shares only as LG has pointed out in his last posting. I believe they will use the escrow markers feom that reserve pool to satisfy the employe claims vested stock options
I didnt make up the rules. I speculated just like everyone else picking their horses. But it looks like if those stock options around $40 are to be worth anything, 75/25 likely will not apply to bankruptcy remote assets. Again, I'm not trying to argue with anyone else. Just my opinion. I think the final safe harbor return to the estate will be between $50B and $100B... so those $40 options arent worth anything if 75/25 apllied to everything.
I've always said years ago that I suspected 75/25 does not apply to everything. Otherwise, there wouldnt have been multiple classes of escrow markers. They would have just made one and split the one class of markers 75/25.
Just my opinion based on my logic. So go easy on the hate replies. Not trying to rain on anyone's parade. Just my interpretation of the clues...
It was 30 old wamu commons for 1 WMIH common. So that would be equivalent 3 million old Wamu commons in dispute reserve for 100k WMIH commons.
Thats what it looks like! A third of their equity claim looks like a stock grant, about a third are options with call price around $8 and the rest are options around $42 call price. I'm assuming if these claims are approved they will be allowed to buy common escrow markers at those call prices. So they must be thinking that common escrow markers will return more than $42!
Just had another thought...what if the employees knew back in 2009 that they would never get the parachute claim, but were entitled to their vested stock option. However, if they brought up their stock option claim with call price at $40/share back in 2009, there would have been plenty of questions on why they thought eventual return on commons would be above $40 to make their claims worth anything.
So in order to prevent the questioning of how much value the employees thought were in bankruptcy remote safe harbored assets, the court allowed them to drag on their "parachute claims" instead. Now that the last of their stock options have vested in 2018, the judge is finally going to say, "sorry no parachute claims, but i will allow your vested stock options at $40/share!"
Wow!!
Could we really be looking at a windfall? I cannot imagine common escrow return above $40/share with 75/25 to the end enforced though...so if this happens then 75/25 will likely not apply to bankruptcy remote assets.
Arent there like a million common shares left in the dispute reserve account? I think those could potentially have escrow markers tied to them
Originally, the vested equity interest for those employees were stock option on WMI commons. So if the option price is $40, those options are worthless unless common stock is above $40 a share. I'm just assuming the same will be true if they are granted their vested equity interest by the court. Their vested options would be pretty much worthless unless the common escrow markers pay off is above their option strike price.. Since, 100,000 of the 250,000 shares have a strike price above $40... well you can make the speculation :)
Wow!! Employees are fighting for vested stock option on about 250,000 shares of common escrow markers??? And of that the option strike price on 100,000 of those shares are set above $40???
Anyone, having doubts on final recovery around $80B+??
Thats my point. They dont care about the bankruptcy schedule. Wmi us just one of the beneficiaries. So the bankruptcy is at their mercy. Hence all these delays we are seeing with the employee claims may not be under Rosen's control. They are simply waiting for all the assets to return. Maybe we are really close to that now as AZ pointed out a few of the trusts he had been tracking are 99% liquidated.
AZ, do you suppose the employee claims were put in there as a placeholder because the estate has no control over the liquidation schedule of the safe harbored assets in the various SPVs which are controlled by independent trustees?
We keep thinking the delays are adversarial but it could simply be that Rosen has no control over the safe harbor assets..and he is at the mercy of the trustees schedule. So they placed this bogus employee claims as a means of keeping the bankruptcy open while waiting for the release of our remote bankruptcy assets?
Another possible reason for the endless delays...
What if Rosen is using the employee claims as a delay tactic in paying escrow because he has no control over the release of safe harbored assets in the various SPVs.
If WMI is just another beneficiary of the various SPVs then it will have to wait just like all other investors and be at the mercy of the trustees of the various SPVs.
Maybe the trustees of the SPVs want to maximize their trustee fees so they are not releasing any funds until all the loans are liquidated.
In short, maybe Rosen's delay tactic is not malicious but in our interest. They are at the mercy of the distribution schedule of the various SPVs and are just delaying to collect escrow money.
I'm not saying they will never distribute but their decision to distribute is totally independent of beneficiary (wmi).
All I'm relaying is the independent legal power of the SPV trustees to sit on their asses and do nothing.
I just hope big money hedge funds have some influence on the trustees. Otherwise we may be waiting a few more years after PIERS is paid off.
I dont think so but they can legally sit on their asses and not distribute.
Just spoke to a corporate attorney about SPVs in general in a bankruptcy situation like ours. In short, WMI as beneficiary has absolutely no control of the timing of distribution from the SPVs. We are at the mercy of the trustee of the SPVs. Essentially, they can hold the distribution for years, even if the loans in the trusts are liquidated into cash, and PIERS and employee claims are both paid in full...
So lets hope there is some sort of inside connection between the hedgies and the trustees of the SPVs holding our safe harbored assets. And somehow they will not screw us by holding the funds for another 10 years.
The attorney friend gave me an example. Her father worked for a company years ago that filed chapter 7...even though the company was plenty solvent, the BOD decided to liquidate. Anyway, her father, a teamster, is still getting checks from the liquidation process 25 years after...
Thank you for the update ItsMyOption. That was my fear with regards to the receivership closing. The LIBOR case was against a bunch of banks, not just JPM. So they would need to settle everyone of them before the receivership case closes. So the two questions now is...
1) Can CIC happen without the finalization of these Libor cases?
2) Can all the various SPVs release their funds after PIERS is paid but before the receivership closes?
Then, wouldnt Coop need to have filed an 8k?
AZ, if CIC has happened has of Dec 31 as you suspect, shouldnt there be a required announcent by WMILT? Also, wouldnt there have been a filing objecting the employee claims based on the new CIC status on Jan 5th?
AZ, hypothetically, what do you think would have happened if there were no employee claims and WMILT was able to pay off PIERS two years ago before Globic was settled? Would WMILT have been legally required to disclose the remote bankruptcy safe harbored assets? If not, they wouldnt have any excuse to keep the bankruptcy going. I suppose that could be their original intent in using employees as pawns to delay until Globic was solved...
But my fear is, like you say, a lot of the trusts require 90% payoff before they are allowed to be liquidated. What if safe harbor applies until all the various SPVs are 90% paid off?
Could this take a few more years? or do you think all of the SPVs have met their liquidation requirementa as of late last year amd hence the estate moving up the employee claims by 6 months?
AZ, it is very possible that our safe harbored SPVs may have been more valuable in runoff mode vs early liquidation a few years ago. Perhaps, the hedgies know this and is why they are keeping their mouths shut all these years and not yelling bloody murder with the endless delays.
Well, they actually filed a lawsuit against the government for AIG under uncomstitutional taking and won. Like wise, they could file a similar lawsuit plus against JPM for fraudulant collusion. All I'm saying is I've seen many class action lawsuits under much less infringement grounds. Why nothing for us?
I think its a good sign there hasnt been any class action lawsuits filed by abulance chasers...It means POR7 may turn put to be a windfall in the end. Ofcourse, its very difficult for us to keep the faith under after all these years but lets not loose our cool until after PIERS are paid off and wait a month or two after to see what happens next
Why hasnt any equity class action lawsuits been brought upon FDIC, JPM, or WMILT with regards to POR 7 since 2012? There are plenty of ambulance chasing law firms out there that would sue on behalf of shareholders for much less injustice...
Either..
1) Shareholders really didnt suffer any injustice and the whole wamu takeover was justified...
or
2) Some law firms did look into POR7 and found that we will all get a windfall at some point.
I just dont believe therw hasnt been any lawfirms that hasnt looked into bringing class action against the estate, Rosen, JPM, or FDIC..
Why no PR announcement for class action since 2012??
Dmd, my assumption was same as yours but the language of the CIC condition got me confused -- especially about the bit thats said CIC will happen upon complete sale of WMI assets. It didnt say WMB
AZ, does the CIC event mean JPM is going to buy all of WMI retained interests in the various SPVs? I dont get that one. Wouldnt the SPV interests flow back directly to WMI? What does the following quote mean by "sale of all or substantially all of WMI assets"?
Per SPV securatization rules, WMB as the originator of the loans cannot own any of the securaties. Thats the securatization rule that allows the originating bank to push off the assets off its balance sheet and separate the credit risk of the loans from the bank..hence securitizing it.
So any retained interests in these securatized loans must be held by WMI or its subsidiaries.
The only question is what percentage of interest in these securatized loans protected by safe harbor is retained by WMI and what percentage us owned by other investors.
Well, we do know from the last 2007 WMI 10k that it earns about $9B a year from interest profits. So I will leave the speculative imagination to you.
IMO, Dr. A with his $86B estimate in court is based on the retained interest in these securatized loans by WMI.
IMO JPM is not going to pay 1 cent more for WMB. If we have any hope of large recoveries for escrow it must come from the retain interests of these securatized loans by WMI protected by safe harbor rules...which could not have been owned by WMB because they were the originating bank..not allowed to own...only servicing allowed.. ownership must be done by a separate entity. WMI or its subsidiaries
Sorry, who is the FRB judge?
WMI definitely retained some percentage of interest in all the loans that WMB originated and securatized over the years. It operated as a savings and loan so the bulk of its income came from interest in performing loans it held.
Per SPV securatization rules, WMB as the originator cannot hold interests in these securatized loans if it separate the assets from its balance sheet liability and make them "off" balance sheet. So any retained interests in these securatised loans must be purchased and retained by the parent WMI or its subsidiaries.
I have no doubt we (WMI) own the retained interests in the loans that WMB securatised over the years as WMB wasnt allowed to hold them as the originating bank.
The biggest proof of this is the 2014 JPM 10k stating the $151B WMB assets they were holding off balance. This is exactly how the originating bank that is servicing the securatised loans would report securatised loans in SPVs.
The only question I have is why the long wait? Most of the WMI creditors have been paid off. only about $50M left for PIERS. why not release the funds last year?
AZ, I understand the argument of waiting for the last creditor class of WMI to be addressed but they are only owed about $50M. Thats not much of an exposure of potential clawback claims from WMI "creditors" so why would DB need to wait?
I agree with you that once the Judge Mary aprroves the final payoff to PIERS, there should not be any legal hurdles left for safe harbor assets distribution...but I just dont understand the last year of wait in 2018. Seems like there was only about $50M in potential clawback liability. Why not start the distribution last year after the probate ended?
Thanks AZ. What is your theory on why the trustee hasnt distributed anything to class 17 all these years? If the underlying assets are in SPVs and are protected under safe harbor from FDIC and WMI creditors, shouldnt the trustee be free to distribute to the beneficiaries? still dont understand how DB can be discharged from probate for over a year now and the beneficiaries still hasnt seen a dime... If the trustee is not accountable for distribution who is?
Maybe WMILT got words of FDIC-R LIBOR lawsuits coming to a settlement and thats why they pushed up employee claims 6 months early. Either way I agree with you this will end really quick once rhe judge approves last payment to PIERS. I cant imagine the bankruptcy not closing for years just waiting on class 18 employee claims for the remaining $11M attorney fee claims.
Question is can the bankruptcy close out before FDIC-R closes out the Wamu receivership. I dont think so. So I also expect to hear an announcement for Libor settlements from FDIC shortly.
I have a new theory on why escrow money has been delayed all these years...WMILT and FDIC-R are trying to outwait one another. Here's my theory.
1) Escrow money is locked up in the SPVs. WMI retaining percentage in loan assets that have been shielded by safe harbor. We know WMB(now JPM) was the originator and servicer of these loans and there was at least $151B of these loans as stated in 2014 JPM 10k as off balance sheet.
2) FDIC-R owes $13B to WMB creditors (class 17) but they only have $1.9B from sale of WMB but they dont have access to the SPVs (safe harbored protected) that WMB originated and is servicing but no longer owns it.
3) However, WMI parent corp owns a percentage of these SPVs and perhaps FDIC-R has plans for clawbacks to use these funds to pay off class 17.
4) The trustees and WMI estate knows this so they delay paying off the last creditor class of WMI, PIERS, so that it can continue to shield its retained assets of the SPVs from FDIC-R potential clawbacks to pay off class 17 which they are reponsible for.. Simply put, the estate is trying to wait out the FDIC-R to close the receivership so when escrow money comes out of safe harbor protection, it wont be under threat of FDIC-R clawback attempts..whether these clawback claims are legal or not, it could potentially tie up the returning assets in court if such attempt happens..
5) likewise, FDIC-R is aware of the delaying tactic by WMILT in paying off the last creditor class PIERS so they are also playing a similar strategy by delaying the closure of the WMB receivership with these LIBOR lawsuit cases against all these banks...which may take years to complete.
6) My theory could be wrong and class 17 bondholders are actually also beneficiaries of the SPV trusts that are protected by safe harbor. Maybe they are junior beneficiaries and hence that is why they havent seen any distribution yet...
Just a theory.
ItsMyOption, the $151B off balance assets stated in JPM 2014 10k proves that there are at least that much loans left in safe harbor as of 2014 that WMB originated. That is the definition of how safe harbor works. WMB orignated loans, placed them into SPV (ABS trusts) to separate the assets from WMB balance sheets and hence provide safe harbor protection if the bank were to be taken over. WMB as the originator of SPV then simply acts as servicer of these assets. They are legally separated and the SPV is controlled by independent trustees.
1) The big question for us is how much of those SPV assets in safe harbor were bought and retained by the parent holding company WMI and its subsidiaries.
2) Yes, techincally, FDIC is not "holding" the assets in safe harbor. Safe Harbor is just a protection status applied to those off balance sheet assets that WMB (now JPM) originated and is now servicing. So techincally, the safe hatbored assets are under the control of the trustees of the SPV and all safe harbor means is FDIC cannot touch those assets to satisfy creditors of WMB (so maybe Class 17 cannot be paid from these assets??)
3) That still leaves the question of when the trustees of those safe harbored SPV are required to distribute the portion retained by WMI and its subsidiaries. Perhaps the trustees have been distributing but escrow holders cant see them because bankruptcy rules allows these distributions to also be held off balance to the estate until such time that Trance 4 is paid???
There must be a legal framework for disclosing bankruptcy remote assets. I'm not exactly sure what the timeline for that disclosure is but it is a logical assumption that there is a timeline to disclosure and it is not indefinite.
Otherwise, there is no legal frame work for bankruptcy remote assets. The trustee can simply rob the trust without anyone ever knowing if they are "never ever" required to disclose those assets. I dont think such indefinte non-disclosure statutes can exist. It makes no sense and would not have ever passed any sort of legislative panel.
So the question is, "when can we petition the court for disclosure of bankruptcy remote assets?". After Tranche 4 is paid off? after class 17 is paid off? after FDIC-R closes? This would be the question someone should ask a bankruptcy attorney.
There must be a point in the bankruptcy timeline where the court can no longer legally ignore bankruptcy remote assets and must comply with our disclosure request. The question is when?
I understand that. But lets say Tranche 4 is completely paid off tomorrow. Then we petition Judge Walrath, "Your Honor, can you please direct WMILT to now disclose our assets in these bankruptcy remote trusts that have been safe harbored?"...and you dont think the Judge will have that power to disclose even after Tranche 4 has been paid off...then how will we ever know who has our bankruptcy remote assets? The trustee can simply hold on to tge liquidated cash until all the beneficiares die and then claim it for themself in lost and found. What authority will prevent that if Judge Walrath will never have the power to force disclosure?