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cents2ks, .. I guess you are focusing our attention to doc 49, ... but where can we find it?
I looked in pacer an kutzman .. but I could not find it. can you please share the doc ( giving us the fish) or tell us where to find it ( teaching us to fish by ourselves).
I could not find them in the 3 cases WMI has in the BK court.
Txs. in advance.
cents2ks, .. it seems FDIC din't like the slap recived by the judge!!
I am not an expert but it sounds to me a pretty agressive wording against a judge in her own court...
Did the BK court commit legal error ...?
Did the BK court abuse its discretion ...?
This is getting everything but boring..
Txs. for posting it.
Lawrence, that Thursday there was at least another bid from City. There is a copy of it circulating in the boards. The $ figure is blackened. I read it months ago.
What City communicated to FDIC in that bid is that there was serious interest and they wanted to talk to FDIC about some alternatives. They also said they had no time/information to do a proper DD, so they could not make a "firm offer" yet, but they wanted to do so.
Officially FDIC dismissed this offer because it was not firm. JPM's offer was firm. JPM had all information from its previous DD that spring, plus whatever FDIC could have informed them ( back door conversations) these days.
.. Clearly FDIC wanted to convey it before the TARP got approved, and just the same day when all short positions in WAMU should have been covered ( according to the SEC rules applicable in that moment ).
Cheers...
Quin-Emanuel's comment about Seattle Times article??
I am a bit surprised Quinn-Emanuel jumps to comment a press article about a case he is working in!! I cannot avoid thinking this is not really from Q-E. What do you think?
... it's unlikely an atty misspelled the word "subpoena", isn't it?
------ extracted from comments to article:"Chase CEO Dimon: No more cuts in Seattle Operations" ------
July 15, 2009 at 3:09 PMRating:
Let's see what Dimon says under oath. Your subpeona is next.
Regards,
Quinn-Emanuel
------
http://community.seattletimes.nwsource.com/reader_feedback/public/display.php?source_name=mbase&source_id=2009477670&offset=40
Txs Island, good to read stuff.
I am afraid this is one of the 99% of the pinks where the commons will get totally wiped out.
I got trapped in the same situation long ago with Worldcom. I wasn't aware I was buying worthless stock.
Here, with WAMUQ, I made my homework back in fall and I came to the conclusion that this is going to be one of the 1% that get a nice recovery. I guess most of us did so.
Let's hope this keeps moving in the BK court and JPM/FDIC's efforts to drag it long time by moving it to DC fail.
Cheers..
I registered in SEC my first complaint today.
This was about the lack of information JPM is giving to its shareholders about the possibility of a court action impacting $B their balance sheet. Of course it's more elaborated but repeating it here is nonesense since everything is known in this board.
I plan to file at least other two in the next days: with the other two topics. One about who had not cover short positions the day of the seizure and another one about the leakeage of information that triggered the aftermarket sell-off some hours before the seizure was communicated.
I am aware I am just planting a small seed that is likely not to grow and influence anything, .. but who knows. Those guys in the SEC failed terribly with Madoff, even when they had been warned. SOX is to be enforced and this is their role, maybe they are more diligent now.
Anyway, the more the complaints, the better .. any seed helps ..
Cheers...
The battle grounds we are not fighting properly.
It seems that WMI fight in the courts is in good progress. We may argue that we still miss proper representation of shareholders in the BK court. I tend to thinks it would be better to be represented by an official comite. But I do understand the doubts of others about this becoming more a burden or delay in the process. I am not sure. However at any rate the fight in the courts is hot and pretty well covered.
However the more I think about it, the more I miss more action in two battle fields:
- Press/Media.
- Regulatory bodies. Specifically the SEC.
The lack of Press/Media attention has been discussed in this board a number of times. Although something is leaking drop by drop it's frustrating to witness what seems to be an orchestrated blackout. Frustrating as it is, I don't have much to contribute here, so I will focus in the next point.
ATTITUDE AND ROLE OF THE SEC. CAN WE DO SOMETHING ABOUT IT?
===========================================================
At the end, the goal I have in mind is to add more pressure to JPM in order to force a settlement. The most sensitive topic for JPM is its pps and this is closely related to their public information to analysts and investors, as well as the credibility what they report.
One of the key SEC's roles is to grant that JPM's reporting ( as any public company) adjusts to reality. After the ENRON and WORLDCOM scandals the ultimate law regulating this is Sarbanes-Oxley (SOX).
SOX states and enforces very severe requirements in many aspects of the financial reporting. I am here specially interested in the OBLIGATION of companies to report ANY SIGNIFICANT KNOWN CONTINGENCY that may impact negatively the earnings or balance sheets.
Ok, JPM has not reported the 4B as their own, but until now these 4B are still reflected in their books as customer's deposits. I mean, here they are playing safe in their books.
However WMI's claims/counterclaims already involve not just the 4B, but up to 10B if we include the other concepts. It also questioned literally the whole conveyance as possibly fraudulent.
My point:
JPM has not reported to the analysts and to the SEC any contingency in their books for at least these 6B (10-4B=6B). And JPM's can neither deny this is a "significant potential contingency" nor this is "known contingency".
If the BK process wouldn't have matured so fast, then it could be argued that the contingency was not real yet, ... this could be the case in the Texas Action.
However, right now, in theory, a judge has stated clearly that she's entitled to rule on the matter, and in theory she could rule any day that up to 6B in JPM'S books should be in WMI's books. If this is not a relevant contingency, then I am a ballet dancer.
The SEC is supposed to monitor that JPM complies with SOX and reports these contingencies. Ok, let's ask the SEC to do so.
ACTION POINT FOR US:
====================
We can file our concerns to the SEC by email - enforcement@sec.gov - or online at:
http://www.sec.gov/complaint.shtml
then, online complains:
http://www.sec.gov/complaint/selectconduct.shtml
then I would chose options 11 or 12 (one of the two about fraud to file proper information ). These are:
http://www.sec.gov/complaint/cf942sec9570.htm
or
http://www.sec.gov/complaint/cf942sec9570.htm
Core of the complaint: "Shouldn't JPM report possible contigencies of several $B, related to WMI's claims in the Delaware BK court?" ... I guess anyone of us could word it as it wants, but in a nut-shell my focus would be around doubts that JPM's is informing properly its investors about the status of the WB affair and its impact in JPM'S earnings.
ANOTHER POSSIBLE SEC's battle fields
====================================
- Did SEC investigated the massive after-market sales of WAMU during the hours previous to the seizure communication? Normal investors were not able to escape, but the aftermarket volume and the price drop showed some insiders did.
- By the SEC short-sales rules applicable during the pre-seizure days all WAMU short positions should have been covered by the end of Sept,24th. Has SEC investigated if this really happened? Who coverd the short positions and who didn't?
Well,... in summary my message here is ... we do have some means to add pressure through the SEC, and we should start using these means.
Cheers...
4B ruling... dates:
As far as I understand:
- JPM has until 7/24 to file its last arguments about the Summary Judgement (the Turnover action).
- Then WMI has until 8/7 to reply.
- Then there will be final oral arguments on 8/24 hearing...
- AND THEN: the days/week after 8/24, the final ruling will be issued.... and WMI's 4B will be at WMI's hands.
This is my bet.
In the meantime WMI should formally request further time to present the Restructuring Plan and the judge should award it.Right now there are not solid grounds to present any plan.
Also in the meantime the ping-pong procedural dance about the BK jurisdiction over the assets litigation will evolve in one way or another. I mean the judge and WMI'S attys have to take care of the Motions to appeal.. and I guess this may be taken care before and/on the 8/24th hearing.
The steps around the discovery, and JPM depositions will start in next week ( with subponeas already issued), but this is unlilely to produce visible results very soon. By logic this must be a lot of detailed work, involving many people. Furthermore, current or new motions to appeal may generate further delays in this sensitive topic, even after the subpoenas have been issued. I am just guessing, but surely JPM will fight like hell to delay depositions as much as possible.
So, in my mind - for the 4B - the key date now is 8/24 and the days just after the 8/24 hearing.
Am I right? Do I miss anything relevant?
Cheers..
From yahoo by vivanbalbo... //
Morere about the question ...4B: deposit or capital contribution? -> which is the core of the 4B litigation.
------posted in yahoo ----------
By the way, another thing to consider regarding JPM's argument that the $4B was "intended" to be a capital contribution to WMB and therefore belonged to WMB rather than WMI:
On the face of it that argument looks to be plausible, since WMI did get a $10B cumulative capital infusion by selling securities in late 2007 and the TPG deal in spring 2008, and it would appear that the $4B in question mainly came from those sources. (It certainly wasn't from profits kicked upstairs by subsidiaries, because there weren't any.)
But (1) from what we've seen of those transactions it is not apparent that WMI was "required" to immediately make a "formal" commitment of those funds to the core capital of WMB, and (2) WMI didn't need to do so because WMB was NOT illiquid and WAS "well capitalized" under OTS standards and was NOT given a warning/demand letter by the OTS to increase capital! Moreover, having the money on deposit at WMB (rather than some other place) added to WMB's liquidity in a practical sense, and on 9/24/08 it hadn't even been 4 months since the TPG group kicked in its contribution. What's more, from reading some of WMI's recent briefs (can't say exactly where I saw it), it appears there WAS normally a formal process by which WMI made capital contributions to WMB, and that that process was followed with respect to some of the capital contributions made earlier in the year, but that there was NO such formal paperwork transferring the $4B in question to WMB as a capital contibution.
So, if WMI never formally turned over the money to WMB as a capital contribution, and JPM can't prove otherwise (and JPM has the burden of proof on this issue), then JPM has no legal standing to beef. It was all WMI's money to begin with, to do with as it wished, not WMB's. Maybe TPG and other investors would have standing to complain, but not JPM.
TXS Cents...
Well daid Bag ...
Txs, Climber .. please read my post 80556, there is a second AP in BK that was initiated by WMI. It's the one evolving faster ... about our 4B!!
Cheers.
.. the 4.4 deposited in WMB/JPM accounts by WMI.
Correction!! there are 5 cases moving on:
Guys, sorry for the inconvenience, there are really not 4 but 5 cases. Related to my previous message there is one more case moving on.
A pretty important one!!: the Turnover Action, in fact it's the AP - in the docs linked I called it APb. It's the one initiated by WMI on April 27th, urging the court to rule specifically on the 4B. So in BK we have:
- BK case / Pacer: 08-12229-MFW / original BK proceeding
- AP case / Pacer: 09-50551-MFW / Initiated by JPM
- APb case / Pacer: 09-50934- MFW / Initiated by WMI (Turnover action)
The TURNOVER ACTION
===================
Please find below a link which includes also the 3 main docs of APb.
http://www.mediafire.com/?sharekey=ca9011ff03192032111096d429abd360e8b8019bed7b177ece018c8114394287
It's here - in APb - where the focus and urgency to rule on the 4B is placed. It's here where the judge rejected stays and dismissals on July,6th.
And it's here where JPMs counterclaimed to retain the 4B (doc APb02= doc 66 in Pacer, dated June,6th) It used the same arguments that when it started their AP, that's why it rang a bell to some of us, ..but this counterclaim is related to APb.
WMI's reaction yesterday has taken only 2 days - see APb03 - and it's very strong. I advice you to read this doc: APb03. It's quite clarifiying and compelling.
Sorry for missguiding you with my previous post. Now, I think I have it right. Any help or correction would be appreciated.
Reading APb03 gave me a strong feeling that APb will move pretty fast ... it's our 4B!!
.... Cheers.
We have 4 cases moving on: two in BK, one in DC and the Texas one. The Texas one was initiated by some shareholders against JPM. The DC one is WMI against FDIC ( jury trial). The ones in BK are the original BK one and the Adv. Proc.
THE ADV PROC... in Pacer is case # : 09-50551-MFW / Delaware BK court.
The Adversary proceeding started by JPM on March,24th and evolved into two topics:
- the litigation about 10B assets ownership ( not just the 4.4B), ... jury trial, again, demanded by WMI
- the discovery /Rule 2004.
You can find the key docs of the Adv. Proc. in this link:
http://www.mediafire.com/?sharekey=ca9011ff03192032111096d429abd360e8b8019bed7b177ece018c8114394287:
Ok, in doc AP01, around pages 30 to 31 we may find the arguments of JPM about the 4.4B. The overall document is an attack against WMI for claiming assets that JPM thinks it bought from FDIC.
In docs AP02 and AP03 we have WMIs answer plus a very agressive counteratack with numerous claims against JPM - included up to 10B, penalties, patents/IP infringement as well as at the very end the demand of a jury trial for some items under dispute.
In docs AP04, JPM gives its grounds about why all this should be moved into the DC action.
Then we have yesterday's reply from JPM to the counter claims which as far as I could detect did not include any new arguments not present in AP01.
------ Guys, if you take some time reading these papers you will see ... this is quite a massive battle, .. it's pretty normal that the judge is taking all time and cautions before ruling. And it's just GREAT that the judge decided she is entlited to rule on this. BK is much faster than DC.
But even so it may take time. It's not just the 4.4b,.. its about 10B in capital contributions, it's about the penalites related, it's about what could be found in the discovery and the related penalties....
Any elephant has to be eaten bite by bite, so let's see the new rulings on the discovery and if we are lucky the ruling on the 4.4b ... but it may take time ... let's sit down and relax...
Cheers..
I think JPM's answer is in doc 66.
and I think this is what the BK judge has to rule on now. We may see a counter-answer again from WMI in between, or see if this is dicussed during the hearing or we may see the ruling beforehand.
The ruling that I expect to happen even before the hearing is the one about discovery.
What I do expect too, is a request from WMI to exted the exclusivity period to submit the restructuring plan. The reason is clear: the explicit reason for the discovery is to include in the restructuring plan the possible extra-value for the state that arises from the discovery. This was almost literally written in the discovery motion that the judge approved previously.
So, as far as I can see ...with the motions for stay or dismiss taken care off, the actions in BK now are:
- about the 4B / Adversary proceeding ..
- about the discovery
- about the extension of exclusivity period.
In parallel we have the DC process against FDIC and the Texas action initiated against JPM by some shareholders. These ones will take longer to mature than the BK one.
Maybe I miss something.
Cheers.
That would be one only possible explanation for JPM's approach.
But if we really think it's possible that western banks fake money transfers, .. then we should all take all our money to a safe box.
If this was the case here, someone would be in jail by today.
On the other hand, I recall from WMI answer to these JPM's arguments, that even JPM keeps sending WMI the monthly account statements with the money in the accout.
Probably we should go back to read WMI's previous answer in detail again. As soon as I have time, I'll do it.
Cheers,
rramirez,...
What I meant is: WMI (the holding) was one more customer of WMB and its subsidiary WMBfsb. As such, it had some deposit accounts.
These 3.67B ended deposited / and are still deposited / in a WMBfsb account.
On Sept. 19th, they could have transfered - and it seems to me they legally could have done it - this money to other bank in other deposit account, let's say Bank of NY. Instead of it they kept it deposited in their own bank, aligned we all their millions of customer's small or large deposits.
Should they have taken the money out, then the "16B deposits run" would have been larger than 16B, therefore worsening the possibility of liquidity problems.
As any customer's deposit account, .. it generates a liability for the bank where the deposit is made. The bank is entitled to return the money if the customer wants it, but banks love this sort of liablility because they can convert it several times into "assets". Once the bank uses these deposited $ to lend money, then these loans become an asset for the bank.
I simply cannot see or grasp why JPM could claim that depositing the money in WMBfsb was "bad" for the bank. Here is where I don't see a point in JPM's claim.
I hope this clarifies my message.
On the other hand, JPM also say that it was a "book's electronic transfer" instead of "real money". What is the point in this? I don't think JPM or anyone else - besides IN movies - ever moved 4B of "real money" anywhere. Everything in a bank is based on books entries as well as electronically executed. Doesn't sound to me like an argument.
Cheers...
Climber ....AP = Adversary Proceeding
3.67B is only part of the 4.4B. 3.67B is what was tranfered in one of the accounts in WMBfsb on Sept,19th. One of several accounts that WMI had in WMB and WMBfsb. The total amount WMI had in these accountas was 4.4B.
In general we are talking about "the 4B".
It's this transfer of 3.67B in this specific account what JPM claims to be fraudulent.
Cheers..
Grey, ...
thanks for re-posting it. This is the most important topic now. I mean: the way - and the day, 9/19 - the deposit was made.
This is not a new argument from JPM, now, given the fact that the BK judge has clearly stated that she, and not the DC court, will rule on this, JPM is repeating the argument.
This was already answered by WMI, it seems these deposits were usual cash movements within the holding and its subsidiaries, and that given the fact that the cash of the holding and the bank was managed by precisely the same people, the formal authorization processes for the transfers were sigle handed.
However the way I read it is that the main point in JPM's argument is not that the paperwork was unclear, but that the intention of that specific deposit on 9/19 was fraudulent and targeted to create a fake liability to a potential post-seizure buyer.
They assume that WMI knew about the seizure by 19th. Just this is quite an assumtion: now it seems clear that JPM learned about it even before WMI ( to be porved in the discovery). And they state that WMI's - "fraudulent" - reaction was to keep the cash in their bank instead of moving it to a safe harbor in an external account. These are quite strange assumptions by JPM, ... the logic seems to be that they kept the cash in their bank to protect their bank of the potential liquidity problem. Which, by the way, was the fair and honest thing to do.
... anyway, this is the topic that the judge has to rule upon...
cheers...
Today's docs. My reading:
The way I see it is this: today 4 topics have been covered.
A) FDIC's intention to delay the AP: quite a slap for FDIC
In doc 63, the judge accepts that FDIC can be a part in the AP for only one purpose (nothing else): make a Motion to Stay or Dismiss the AP, then in docs 62b and 68, the judge rejects the motion presented by FDCI, ... game over for FDIC with the AP
B) JPM's intention to delay the AP:
In doc 62a and 64 this intention is rejected. The AP is not dismissed or delayed.
C) JPM's intention to gain time to answer WMIs request for Summary Judgement.
In doc 65, the judge gives JPM some more time, rejecting WMI's request to reconsider it.
D) JPM keeps trying to hold the 3.67B.
Given the fact that the judge stated that the 4B topic is to be decided by her and in BK,... now JPM - in doc 66 - repeats its known argument:WMI's 3.67B deposit in a WMBfsb account was a fake/fraud.
Although they keep insisting this shouldn't be ruled in BK but in DC, it seems they made up their minds about the fact that it's this judge- an not the DC's one, the one they have to convince. And - as far as I could read - they did not add new arguments.
MY CONCLUSION:
Before ordering clearly what we want she to order, the judge needs to clear and clean all possible "legal burdens" about her right to rule, the fact that she is really listening all arguments from all parties - FDIC included in an ashaming way -, etc.. and only then ... the final important order can be issued without any room for future "appeal or reconsideration".
The key argument of JPM about the 3.67B sounds to me very very weak. In essence they say WMI transfered the money to their WMBfsb deposit account, because they knew on 19/9 that - when the made the deposit - about an inminent seizure and that by making such a deposit they wanted to "create an artificial or fraudulent" deposit liability for the future post-seizure buyer.
I may be a fool but the natural way to react would be the other way around: moving the holding's money away from the entities under seizure risk. But this would have been unfair to their Bank's customers and would have worsened their only potential problem: liquidity. Instead of the famous 16B deposit run, it would have been a 20B run. It seems to me they did the right thing for their customers.. keep the cash in their bank.
Frankly - please correct me if I miss something - I don't see a point in JPM's argument.
All my opinions ... any feedback based in other eyes reading the docs would be much appreciated.
Cheers...
---------- the docs ----------
62 Order/ denying a) JPM’s motion to stay AP
denying b) FDIC’s motion to stay or dismiss AP
63 Order/ grants FDCI to intervene for the limited purpose of making the Motion to Stay or Dismiss.
64 Order/ denying JPM’s Motion to dismiss AP
65 Order/ denying WMI’s Motion for Reconsideration of Order granting JPM’s expedited Motion for additional time to respond to WMI’s Summary Judgment Motion.
66 Answer/ JPM answering:
• Denying everything
• Stating that the 3.67B transfer – 19th/09 from WMI to a deposit WMBfsb account (owned by WMI) was a “Book Entry Transfer” and was improper and fraudulent.
• Stating that the dispute over the 3.67B is not a matter for the BK court but for the DC court.
• Accusing WMI of fraud, unjust enrichment, etc … and asking for penalties
• Stating that other rights – 230M NOL – are JPM’s assets and not WMI’s
68 Order /Denying FDI’s Motion to Stay AP
savy, these keystats are obviously wrong.
It would be nice if they would be right, with 12B in cash, 10,31B in operating cashflow, book value per share 13.355, .etc ... but the whole stats are wrong...
Somehow the report must be mixing pre-seizure quarters with post-seizure ones. This has likely been produced blindly by a computer based process without any human/analist "sanity check" filtering.
Anyway, thanks for sharing it.
Cheers..
EXCELLENT READING!!
http://www.patenthawk.com/blog/2009/04/wamu.html
Take a read to the HROLLER's description of WMI events. Although it's a bit long, it's the best description of what we have witnessed.
With the excellent lawyers involved here it's difficult to imagine there will not be a very nice compensation to WMI shareholders..
I also think this reading gives good hints about the sort of "smoking gun" topics that WMI seems to expect to find easily with the discovery - even with the one limited to pre-seizure events. Things like: the dual role of FDIC during Sept., like the short-selling that was never covered ( although legally it should have been covered not later that Sept,25th ), the leakage to CNBC, etc,,,
It's not just about the BK process....It also gives clarity about the obvious grouds for the DC suit against FDIC and it's potential to succeed.
This is really going to hit main media sooner or later, even a future movie as some posters predict, ..
$12 was not my expectation, but after reading with such a clarity what happened and in what context ....It well may be that overtime Diamond's $12 are achieved or even beaten...
Let's wait and see !!
Cheers.
Loud and clear !!
... I had not read this one until now ... it's quite strong..
http://www.nutzworld.com/invest/wamu-how_the_government_failed_america.htm
Case: 08-12229-MFW
Doc: 1259 filed & entered 07/01/2009
In Pacer today: WMI's answer to JPM's motion to reconsider...
After reading it in detail I got two conclusions:
1.- WMI's made it very very easy for the judge to reject JPM's request.
2.-JPM is toasted with this 2004 rule. I do think now WMI knows upfront what they are looking for with the discovery - maybe JPM knows it too. Otherwise WMI would have not voluteer to narrow the scope as they did. It's not just a fishing expedition ... just in case we find something...By the way ...narrowing it down to just... several years backwards !!!
This is getting very interesting...
Cheers.
I personally digged into the FDIC website some months ago and I clearly read in their own documents - I think it was in something like the mission statement - that one of their objectives after seizure is to maximize the value of the estate or something similar.
The first goal was to grant the deposits, but their mission is also to preserve the max value of the seized entity.
If my reading is correct, they legally complied with their own rules - after seizure - only if they can argue/demostrate that they did a reasonable effort not just to grant the deposits, but, once this is granted, to get at least a fair value ...
They just did not bother for a second to take care of any other goal but to preserve the deposits.
In my opinion it is not that difficult to demostrate that they didn't act dutifully according to their own mission statements. This may not be fraudulent, but they have their responsabilities and many people got severely damaged by their decision.
I also read in their site the guidelines/criteria to move a bank through different "risk status" and appliying their own criteria - in their written own rules - to WMB it did not qualified to get downgraded, much less seized.
Their rules also state that they have to give formal written - notice to the "to-be-seized", bank with certain time in advance. As far as we know this did not happen with WMI. There was ongoing conversations and meetings about the actions taken in the past and to be taken in the future by WMB to harbor through the crisis, but in the middle of these conversations and without the formal announcement they got seized.
Finally the P&AA that supports the conveyance lacks the critical exhibit describing the assets conveyed, and by today seems clear that JPM thought they were buying and FDIC tried to sell, assets that the FDIC was not entitled to sell, because it was not entitled to seize. At least there is clearly a wide grey area that leaves plenty of room for doubts. Why didn't they wrote the critical exhibit? Did they really know what exactly was included in the deal?
In summary I think that there are enough grouds for heavy litigation in FDIC pre-seizure, during seizure and post seizure actions. I also think WMI lawyers have found clear grouds for this litigation, otherwise they would not have sued FDIC facing what would be a hopeless long and expensive litigation that would drain the resources that - in a BK process - should be preserved for creditors upong the judge survelliance.
Not to mention any possible pre-seizure wrongdoing related to exchanges between FDIC and JPM during those critical days/weeks. If these wrongdoings existed, they would have stayed covered forever, ... but with the discovery order, now they could eventually become visible in a near future.
Check in the FDIC site, it takes time but you will find their explicit objectives and criterias. Whatever Bair talks now, they have some duties in written.
Cheers.
txs, Climber, .. very kind of you!!
About (risk)commons getting canceled:
If there was limited risk of commons getting canceled back in Jan/Feb (*), now -at this point of time - there is barely any risk of it.
Besides the past arguments (*), now, there is one very strong argument: WMI's motion requesting to speed up the 2004 rule - originaly demanded in the Texas Action - in the BK court was accepted yesterday by the judge.
An the only reason why the BK court entered into this matter is because the result of that "discovery" may have huge impact in the Debtor's estate, therefore it may reshape totally the possible restructuring plan and the way WMI exits BK. This is the only matter that concerns a BK court. Please read WMI's motion and you will see that this was and is the argument to bring the "Texas Action" into the BK court boiler plate.
So, in essence yesterday the Judge accepted that there is need to speed up this discovery in order to clarify asap what's its impact in the debtor's estate. Only then the judge would be able to consider a BK exit plan, and only a BK exit plan can end in a decision to either cancel the commons or get them severely diluted by new shares issued in exchange of debt.
SO, SINCE YESTERDAY, AND UNTIL THE DISCOVERY PROCESS ENDS, THERE IS NOT ANY RISK OF IT.
ONCE THE DISCOVERY ENDS, ,AND ONLY IN CASE IT ENDS WITH TOTALLY DISAPPOINTING RESULTS FOR WMI, THERE WILL BE AGAIN SOME RISK OF COMMONS GETTING WIPED OUT OR SEVERELY DILUTED. AND EVEN IN THIS CASE, THE RISK WOULD BE AGAIN AS LIMITED (*) AS IT WAS BEFORE YESTERDAY DECISION.
(*) The PRE-24/June arguments against the commons getting wiped out are still all valid:
- A change in ownership by a non banking entity - ownership is commons! - above 4,7% means the NOL rights would be lost.
- The debt is almost long term debt( until 2040). Only 1/8 of the debt was due for 2009. These bond holders expectation is long term reward, and its more likely that they get 100% rewarded if WMI stays alive and intact until the outcome of the legal suits produces results that if they force a liquidation that would give them a limited result. Bear in mind that - besides the 4B - there are several billionare tranches disputed with JPM and FDIC in two courts. This before the discovery results, whatever these are.
- The assets - besides the 4B - will be much more valueable once the economic environment improves. They were valued in the A/L balance at it's worst value, and even so the balance was near to even.
- TPG is still in, loaded of commons and has limited chances to exit without destroying the NOLs rights .. etc. And TPG has resources, vision and experience to manage this situation.
THE ONLY ARGUMENT I HAVE EVER READ IN ANY BOARD SINCE OCTOBER SUPPORTING THE IDEA OF COMMONS CANCELLATION IS THIS ONE:
- In 99% of BK cases the shareholders get wipped -
Ok, if this is a valid argument for you then it's better that you sell this asap, since this argument is constant, and independent of any court decision, any strategy or tactics, any specifics of any company, etc..
The point is that WMI seems to have all the cards to be one of these few 1% of BK cases that exit succesfully the process preserving the value for shareholders.
The rest is MMs plays, short term flipping, etc...
The order signed by the judge:
http://members.cox.net/raggztwitches/2004Order.pdf
The rational signed by the judge:
http://members.cox.net/raggztwitches/2004Opinion.pdf
... I have to disconnect now, ... but I would not be surprised to see the equivalent docs for the 4B very very soon.
Cheers.
YES, SHE GRANTED THE DISCOVEY!!!
This is just great news....
Good stuff fsshon.... nice read.
I bet for:
A) the 4B to be decided very soon in favor of WMI ( before or on 24th )
B) Discovery decision delayed ... leaving time for a buyout/global settlement to get finalized... in one/two months from now. ( my bet )
C) Unless the judge does not see signs of B) ... in this case the decision on discovery could happen early.
Cheers.
thanks sidedraft
thanks jackson
Can anyone post a link to the FDIC response filed today?
I see some of you commenting it, but I have not clue where to get it.
I know how to get BK court docs from Pacer and Kurtzman, but not from the other court.
Thanks in advance & cheers
Good reading StockBomber11 !!!
... the word is leaking .....
thanks for the link!
cheers.
I'not so sure John.
If WMI get the 4B, then it can pay the interests and the yearly due principal from the debt/prefs for a very long time. Remember, almost 90% of the debt is long term - up to 2049.
There are not any creditors in real urgency to recover - like suppliers, etc. As a matter of fact the expectation of very long term creditors as the WMI's ones is to get their interests over very long periods. This sounds obvious but sometimes we forget it assuming that bond holders heve the expectation to recover the money asap. That is not the deal they originaly signed when they lend.
On the other hand the B/S is relatively well "balanced" and the running expenses are basically attorneys.
So in a nutshell with the 4B ant hand, WMI can wait out of BK with none entlitled to force a liquidation.
But waiting for what?
Leaving apart the possible buyout/settlement that may happen any time or never ....there are still two sources of income:
The future income of a holding has to do with the performace of its subsidiaries - and WMI still have quite a few - as well as with the possible future disinventments.
Assuming -as it is - that the value of subsidiaries in the B/S is recorded at it lowest valuation - the worst of: either book value, or mark-to-market as per Sept. horrible market conditions, then there may be potential value increases in the next months/years.
Other sources of income are the possible results of the lawsuits. In this case the potential is so high compared to debt-4B, that it may be worth out of Bk to wait for years.
Finally a company out of BK can again view rated much better from analists as well as it can suit the investment policies of hedge funds and others.
In summary, in my opinion and provided we get the 4B it makes a lot of sense to come out of BK.
Cheers!!
Island, here you can find it.
http://www.fdic.gov/about/freedom/Washington_Mutual_P_and_A.pdf
Sorry for the delay, I was just about a catch a flight when I was posting some hours ago.
I am sending you something by email too..
Cheers!!
I have the original one, from Pacer/Kutzman in my computer and it didn't include the 3.1a.
Jay & Island, we reviewed the PA - me among others - many times ( back in Nov) and nobody found the 3.1a.
It seems Jay think or know that it exists although it's hiden.
Seems difficult for me to belive that a key doc, like this one can be made public, submmited to the court, etc as a fake, on purpose.
Jay, you may have reasons to raise this point, otherwise you would not have posted it. Can you share these reasons?
Txs, and cheers,