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So a decision in our adversary case is appeal-able? Yes?
A few have made the point that the judge wouldn't put us in mediation if we were going to be class 12. But the debtor asked for the mediation, and neither side knows the judges decision at this point - right? I would think the judge would agree to let them settle it rather than rule on it herself. Especially if any decision on her part makes it likely another class will object.
Am I way off base? I appreciate all the analysis by those who know their stuff because I don't.
While mediation is ongoing can the judge rule on our case or doe she wait for mediation results?
Cd NOL - The way I understand it most of the 17 billion in NOL's were attributable to the bank and remain with it. The bank WMB is not part of the new WMI and much of the nol's are lost. I don't know the number that is left but the "value" added to wmi's enterprise value is not huge < 50 million if I'm reading right. I am not an expert and could be wrong.
In addition to the foregoing, the Bankruptcy Court determined, pursuant to the September
Opinion, that the present value of the projected income stream from the runoff of the existing portfolio of
WM Mortgage Reinsurance Company, Inc. (“WMMRC”) (the entity that will be the sole operating
subsidiary of Reorganized WMI), excluding any value attributed to potentially available net operating
losses (“NOLs”), is $140 million. (Id. at 43-45.) The Bankruptcy Court further determined, in the
context of the Modified Sixth Amended Plan, that the total enterprise value for Reorganized WMI
(inclusive of both the projected income stream from the runoff of WMMRC’s existing portfolio as well as
potentially available NOLs), is $210 million (id. at 62).
It's been three weeks since closing arguments. This new por was hugely complicated by the fact that we remain unsettled. It just seems crazy to me that our case could not have been sped up to move the whole bankruptcy along.
Of course, having been here a long time, I should know not to expect speed.
I also know that after this last week I could sure use a score from dime.
I was figuring the market cap that a 9 cent price for wamuq implied for the newco given that equity was receiving 30% of the new stock -w/o factoring in dime.
.09 times 1,700,000 outstanding divided by .30 implies a 500 million market cap for new wmi.
Just trying to look at the current wamu price from a different angle.
Nothing to do with dime.
A price of nine cents and outstanding of 1.7 mil makes the wamuq portion of the newco valued at 153 mil. Equity is 30% so the whole new wmi is being valued at about 500 million based on the wamu price.
I could do the same thing with the prfd's I guess but I'm lazy.
Right? Will this have a 500 million dollar market cap? I don't know anything about it but that seems too high.
phillip - That's the way I understand it. If we are class 18 we're still a zero. Classed as equity would be ok if there was enough value in the equity for us to receive 335 million worth. I don't know what value to put on the new company but the common holders better hope we're not equity.
All I see that's new in this is that if we are equity, we'll receive something rather than nothing.
Willingham and the equity committee said they are "pleased with the result." I wonder if they have some reason to believe we are class 12 or 18 and won't dilute them?
Pmax - I don't see pari passu as meaning 15%. I think we'd get the 335 in wamu stock as calculated below. Our rights are pari passu with common not the amount No? Anyone?
an amount equal to the lesser of (1) the amount estimated by the Bankruptcy Court as
the maximum amount in which the Disputed Claims relating to the Dime Warrants may ultimately
become Allowed Claims times the per share price of Common Equity Interests on a date established by
the Bankruptcy Court bears to the market capitalization of all other Common Equity Interests (as
determined by the Bankruptcy Court using such same per share price), (2) the liquidated amount
determined, pursuant to an order of the Bankruptcy Court, as the amount in which the Disputed Claims
relating to the Dime Warrants are Allowed Claims times the per share price of Common Equity Interests
on a date established by the Bankruptcy Court bears to the market capitalization of all other Common
Equity Interests (as determined by the Bankruptcy Court using such same per share price), (3) the amount
established by the United States Court of Federal Claims in the Anchor Litigation, pursuant to a Final
Order, as applied in connection with the Dime Warrant Litigation, times the per share price of Common
Equity Interests on a date established by the Bankruptcy Court bears to the market capitalization of all
other Common Equity Interests (as determined by the Bankruptcy Court using such same per share price)
and (4) such other amount as may be agreed upon by the plaintiffs in the Dime Warrant Litigation and the
Liquidating Trustee; provided, however, the recovery in connection with the Dime Warrant Litigation
will not exceed the lesser of (1), (2), (3) and (4) above,
Jared Important point about class 18. I didn't think about that.
Thought this was nothing but good for us but I missed that. I actually made a small purchase this morning at 62.
We've been arguing that we're debt and we might be better as equity!
Someone bought it. Someone sold it. If you are accustomed to looking at whatever screen tells you b or s, you should give it up. It means nothing. Not being nasty, but it means nothing.
Rugby- thanks. I'm just wondering if there's somewhere else to get information other than reading all the old pacer filings.
How do you guts know so much about this? Just reading pacer?
Legalese - The masculine shall include the feminine, the singular shall include the plural, and the present tense shall include the past and future tense.
"Consider the fact that Congress once passed legislation declaring that 'September 16, 1940 means June 27, 1950.' In New Zealand, the law says that a 'day' means a period of 72 hours, while an Australian statute defines 'citrus fruit' to include eggs. To American lawyers, a 22-year-old document is 'ancient,' while a 17-year-old person is an 'infant.' At one time or another, the law has defined 'dead person' to include nuns, 'daughter' to include son, and 'cow' to include horse; it has even declared white to be black.
From The Party of the First Part: The Curious World of Legalese
Roger Freedman
Just got it from the library. I thought it might help me understand a case that's gone on since 1995.
Trading in the low 5's, just about everyone in this had a tax loss. I think tax selling has put a lot of pressure on it. This could very easily have a big big run up. Could.
72 cents. The Chiron effect? Better than Buffett.
Are filings anywhere other than pacer? Thanks.
Some of the selling could be tax selling. Just about anyone in it has a loss.
Well thank you Mr Death.
And, if we lose here, is a suit against WMI board outside of the bankruptcy an option.
That's tacked on to Jared's question about an appeal.
The last time we traded down to a penny we were far from over. When it's over this time, is it really over?
Which reminds me of John Belushi, "Nothing is over until we say it's over. Was it over when the Germans bombed Pearl Harbor? Hell no"
I think we're seeing tax selling as well. For anyone who needs a tax loss this is an easy one to bail out of.
Wow. Strochak's torture to listen to. Just tuned in.
On second thought, never mind. Just read seeking alpha article which explains it all. Like Rosanne Rosanna Danna said, never mind
Grudge,Sig,- Does the wahuq price, in your opinion, reflect the possibility of a 335 mil loss? Are some buying both in some ratio for a win/win? I see they've been straight down since Sep but up good on Fri. I wonder if that means anything.
As an aside, knowing nothing about the piers, I just saw the big drop in sept. and went back in ihub to posts on that date trying to see what happened. It's incredible how many posters had no idea why their security had just dropped from 15 to 4. The posts were ridiculous. Finally someone posted the correct reason.
Enough already.
This is not a shell. Shares have been cancelled, not deregistered. There is a difference. They do not exist. They are worth zero.
Thanks Jared. I took another look at the debtors reply and the class 18 argument was kind of odd. It was a quick 3 or 4 pages tacked on to the end like "and furthermore"... But, it was as if they were making an obvious point that didn't need much elaboration.
We'll get to read our side soon.
"Class 16 is showing a 73 % recovery while Class 18 is showing a 0 - 100 % recovery."
Is that recovery including the 335 mil or so set aside for ltw's? Or would our 335 add to class 16 and filter further down? Could some of it reach 18?
Thanks.
mrholty - I agree. It's the class 18 that concerns me. I've been reading all this wondering why no one has mentioned it. I don't have the expertise to comment so I don't, but the debtors were certainly focusing on it. Whether their argument was good or not I don't know.
I will say that trading at 65 cents the chapter 18 possibility seems to be priced in. But, I don't think we're the screaming buy we'd be at this price if 18 wasn't a real possibility.
Let's say the odds without the class 18 option were 50/50 between equity or debt. Now, if debt, and odds are 50/50 between class 12 or class 18, our overall odds are 1 in 4, which seems to me to be what the price indicates.
I think the class 18 argument was no surprise to a lot of investors. I also think to this legally uneducated reader, they made a good case for 18, including citing a lot of precedent. It could all be bs in which case steinberg will shoot it down. We'll see.
For me, it's still a crap shoot and this price seems reasonable, whereas a week ago I thought it was too cheap. 18 explains it.
I too don't like the sound of the subordination/class 18 segment. I don't understand it, but they cited a whole lot of precedent for why we should be 18 rather than 12. I didn't know that was an option.
But, I kind of think that's why we're trading at 65 cents rather than 1.20 say. This is one other option besides equity vs debt. If our odds were 1 in 2 w/o the class 18 option maybe they're 1 in 3 with it. I had wondered why this wasn't higher based on the odds vs reward.
No bickering? No childish banter? Party pooper!
They italicize Eitel here "But the purpose, to me, was, as I
stated, to preserve the interest as equity holders of certain Dime
shareholders," as if his use of "equity" somehow rubs off on the ltw's. That they were given to dime equity holders does not mean that they are equity. The gist of what he was saying is that they were intended to transfer the recovery from the litigation, not that they are equity. All they do is find the passage where he most often uses the word equity and claim that this proves their claim. I've only hit page two and they're already pissing me off.
Hey Merch - What do you think of abcp? Another winstar case. Seems like a reasonable shot to me.
Thanks Jared. I need a summary every once in a while to remember why I'm here. Especially since I didn't understand it to start with.
And Jeff Thanks for replying.
I can't PM. Too cheap to upgrade.
Linda - Thanks for the reply. All those old share calculations are out the window now with the bankruptcy. If we are moved to class 12 we should receive at least the 345mil/110 outstanding for about $3/share. This is exactly what Jared was calculating.
My only point was that with a price of about sixty cents, I just can't help wondering if there's something we're missing.
Time to getting paid is a small factor I guess. Could legal fees come out of the 345 maybe? We are a class action now.
I do think that as the possibility of zero gets closer people are anxious to bail out at a price that might seem low to some. You do have to be ready to lose your money with this one and that makes it tough to hold.
Current price of .64 tells me we are the underdog in this trial or the payout is not what I think it will be.
Are we missing something? If the potential is 2.50 to $3, it seems to me this should be higher.
I bought a little yesterday.
Edit: Every time I write something I click enter and someone's posted in the meantime. That's how long it takes me to write.
If we lose we are just above equity.
Class 19 Preferred Equity Interests
Class 20 Dime Warrants
Class 21 Common Equity Interests
In the current por we would get nothing. Zero. Wamuq holders are hoping that changes and money comes down to equity, in which case we'd get paid.
Bottom line is that you need to understand this could be a zero.
A few questions/points:
If we lose, we are still above common equity in the current por, meaning we will be paid in full before wamuq holders receive a dime. Correct?
At this price, 60 cents, if we are receiving $3 let's say, that's 500%. Someone paying 7 cents for wamuq, has to believe that dime will be paid in full, and more than .35/share will be left over. Otherwise buy dime not common.
I guess there's a bigger potential upside with the wamu, but it seems to me if you own common you'd want to own dime as well.
Is there a real chance that mediation will bring common into the money? Is that the speculation? Because if that's the case we're good.
That's only two questions I think.
Philop - The Bank Case That Refuses to Die
By GRETCHEN MORGENSON
ANGELO R. MOZILO and Kerry K. Killinger look like they’re in the clear: federal prosecutors have declined to go after them and many other masters of the mortgage disaster.
Related
Go to your Portfolio »
So it’s downright mystifying that the Justice Department keeps pressing a losing case against a financial institution that was seized in — are you ready? — 1992.
The institution in question, Carteret Savings Bank of New Jersey, was a pipsqueak next to Countrywide Financial and Washington Mutual, the giant wrecks once presided over by Mr. Mozilo and Mr. Killinger, respectively. For the last 20 years, Carteret Savings’ parent company has argued that the government caused the bank to fail and has tried to recover some money for its shareholders. In late August, Loren A. Smith, a senior judge in the Court of Federal Claims, sided with the parent company, ruling that the government should pay it $205 million in damages.
But rather than accept that ruling, the Justice Department asked Judge Smith last week to reconsider, “to prevent a manifest injustice.” And so the case drags on.
Richard A. Bianco is the chief executive of the Ambase Corporation, which bought Carteret way back in 1987. He estimates that this battle has cost the company’s shareholders $10 million in legal fees.
“For 20 years our stockholders have been suffering through this mess,” Mr. Bianco said. “We think it is a wrongful action by the government.”
Asked why the Justice Department refused to accept the ruling, Charles Miller, a spokesman, said, “We are continuing to litigate because the case has not yet been resolved.”
Here are the details of this amazing tale: In the 1980s, as a number of savings institutions ran into trouble, regulators encouraged stronger banks to absorb imperiled ones. Part of that encouragement involved something called supervisory goodwill. The government let strong banks include in their regulatory capital intangible assets associated with acquisitions of troubled thrifts. This supervisory goodwill was to be written down over at least 25 years, giving the acquirers a good, long-term cushion.
Regulators came up with this accounting treatment to reduce the cost to taxpayers. If healthy banks absorbed teetering ones, taxpayers wouldn’t have to pick up the bill.
Carteret, founded in 1888, bought several beleaguered banks in the 1980s at the suggestion of regulators. By 1988, it was the nation’s 19th-largest savings and loan. After it absorbed the troubled institutions, its supervisory capital reached $182 million, more than half its regulatory capital of $322 million.
Then, in August 1989, Congress, in its wisdom, eliminated the goodwill accounting treatment. As a result, scores of banks fell short of capital requirements. Carteret’s regulatory capital fell by more than half.
Carteret scrambled, selling branches and increasing its reserves against bad loans. It lost money on its commercial real estate and corporate loan portfolios in 1989 and 1990, but returned to profitability in late 1991. By the end of November 1992, Carteret recorded net income of $11 million. But it still didn’t have enough capital. It tried to raise money from investors but failed.
So, on Dec. 4, 1992, the Office of Thrift Supervision seized Carteret, even though regional regulators recommended against a takeover.
Carteret’s parent sued, arguing that the government had breached its contract by eliminating the goodwill benefit and that that decision had caused the collapse. The government countered that bad commercial real estate and corporate loans would have sunk Carteret anyway.
The case inched through the courts. Finally, on Aug. 31 this year, Judge Smith sided with Carteret’s parent, finding that the government had caused the collapse. Carteret’s financial standing had stabilized in 1992 and its profitability was sustainable, the court said, citing testimony from regulators. One regulator testified that Carteret could have survived had the government waited one more month.
Judge Smith also concluded that the government impeded Carteret’s attempts to raise capital from investors in 1992, saying the bank “was unable to find a match as the government imposed harsh and unrealistic requirements making it impossible for any investors to invest.”
The $205 million award was based on a calculation of Carteret’s market value before Congress changed the rules. The judge also awarded Carteret’s parent an unspecified sum to offset any tax liabilities it would have to pay on the damages.
Judge Smith, in his ruling, expressed frustration at not being allowed to add interest or legal fees, because of the government’s sovereign immunity. “In dollar terms, plaintiffs will receive about one-third of the value of what they have lost by the breach,” he wrote. “This is unfair and unjust, but the Congress, not the court, must address this injustice.”
With the Justice Department still pressing the case, Mr. Bianco said: “It’s tough to fight City Hall. The stockholders realize it has been one very tough road. If the government would have left Carteret alone, the taxpayers would have saved all these legal expenses and would not have to pay this award.”
The Justice Department probably won’t get far in trying to get Judge Smith to reconsider — his opinion is pretty scathing. But the government could appeal to the Third Circuit Appellate Court, according to David H. Thompson, the lawyer at Cooper & Kirk who represents Carteret and its parent. It could also try its luck with the United States Supreme Court, he said.
It’s unclear who would have to pay the award if Carteret prevails. Mr. Thompson said it could be the United States Treasury — that is, taxpayers — or the Federal Deposit Insurance Corporation’s fund, which is paid for by financial institutions.
Whatever the outcome, Mr. Thompson said: “This case stands as a monument to bureaucratic folly.”
You bet.
Dates from the transcript - So we've sketched that out and we've
2 agreed on dates of October 14th for the submission of
plaintiff's post-trial brief, October 28 for the defendants'
and then the reply papers on November 11th
Final arguments the day before Thanksgiving.