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Large Green,
It is not FDIC that caused assets to be hidden in plain sight, it was WMI/WMB. FDIC does not recognize them as "exempt'' or "hidden" the court had to.
The important part is that the BK court proceedings and those of FDIC-R are separate. The two clashed only once when we thought the court would cite them for contempt. FDIC-R was simply reminding the court of the line in the sand, and the court agreed.
Keep in mind the single most important part of the value of the mortgages and MBSs has to be balanced against any capital used, which came from bank deposits. Once that is done, and all other claims are settled, what is left over (if any) is what will hit the waterfall.
Large Green –
What was the court’s ruling on this motion and, in your opinion, what defines the word “depositors” used in the motion?
Best regards,
David West
Willingham exited BK with exactly 34,260 shares of WMIH. Add that to the free shares he has received to get his current holding.
Large Green -
What document references the 2.5%, and on what page?
Thanks.
Best regards,
David West
Where will the 2.5% come from? Will there be any, yes or no?
Additionally, it is disheartening to think that every Tom, Dick, and Harry who did not own any stock before the conversion and exit, but now owns some, will benefit from anything coming to WMIH from the Trust.
Best regards,
David West
Reiko, WMIH is allowed to get up to two and half percent of monies the trust brings in through "third party" suits which we now know from Susman's filing there will NOT be any such suits.
Large Green - It is unclear to me how that would work. If the 2.5% comes from third-party suits, and there are not going to be any third-party suits, how does 2.5% of nothing equate to anything above zero?
Please clarify.
Best regards,
David West
Naysayers? No, just practical thinking.
As many posters have noted, the documented evidence from any source clearly shows the value of the escrow markers is not there now, and will be minimal in the future. If new evidence surfaces, which will change the status of the escrow markers, the evidence will change minds too. For example, the FDIC-R Status of Washington Mutual Bank web page shows the Total Liabilities and Net Worth of The Washington Mutual Bank to be $2,762,477. Some will say this number is it, and there is nothing else expected. Others will say this number reflects WMB, and not the bankrupt estate of WMI. One day we will all know.
FDIC-R Information for Washington Mutual Bank, Henderson, NV and Washington Mutual Bank, FSB, Park City, UT: https://www.fdic.gov/bank/individual/failed/wamu.html
Balance Sheet Summary: https://www5.fdic.gov/drrip/bal/balancesheet.asp
********
Until then, WMIH is real, and there is real evidence that guides us to know what is going on, may go on, and will go on. If you have not read the Annual Report of 2013 for WMIH, read away. It is a long read, but worth the adventure for shareholders.
An excerpt from the report:
WMIHC’s common stock is trading over-the-counter on the OTCQB electronic quotation system without the support of WMIHC and caution is advised.
We do not currently intend to have any of our securities listed on an exchange or a national market. We note that our common stock currently trades over-the-counter on OTC Markets OTCQB electronic quotation system (“OTCQB”) on an unsolicited quote basis, meaning that all prices reflect unsolicited customer orders. Investors are cautioned that no firm is making a market in our stock and investors may have a difficult time selling our stock. We have not taken any steps or actions to list or otherwise facilitate any trading in our common stock. We remind shareholders and investors that we have no control over the trading of our securities on the OTCQB or otherwise, except for the restrictions on transfers contained in our Articles.
Annual Report of 2013
scroll down when the blank page comes up)
http://wmiholdingscorp.com/wp-content/uploads/2014/06/630387ACL.pdf
Best regards,
David West
...with respect to the WMB Stock to the FDIC...
WMI owned all (100%) of the WMB Stock. They petitioned the court for permission to abandon the stock, knowing the act would generate a large amount of NOLs. The "creditor" angle was referring to a loan made by WMI to WMB. Different animals. Is WMI a creditor? It is possible. More information is needed before certainty is assured.
Some useful links and numbers:
Reorganized WAMU Calculator Formula
http://www.geishababy.com/WaMu/ReorganizedWAMUCalculatorFormula.aspx?TPSPercentageRejectingReleases=0&WAMKQPercentageRejectingReleases=0&WAMPQPercentageRejectingReleases=0&WAMUQPercentageRejectingReleases=0&NoteholderPurchasePercentage=1&DIMEQCommonOwnershipPercentage=0.0877&EstimatedValueOfSubordinatedClaims=35000000&PreferredOwnershipPercentage=0.75
Data is dated and some numbers are inaccurate, such as the final rate of conversion for common shares, which is one new common share in WMIH for each 29.188558085231 old shares of WAMUQ owned. The final rate of conversion increased slightly from the original rate of conversion due to the court’s release of shares that did not give releases. This act also caused common shares to be reduced from approximately 1.7B shares to 1.4B shares.
Example:
Your old shares divided by 29.188558085231 = new shares
Or:
500,000 old shares divided by 29.188558085231 = 17,129.999999999800 new shares
Rounded to 17,130
Reorganized WAMU Calculator Formula
This formula is based on MrSesameSeed's interpretation of POR 7 available at http://www.kccllc.net/documents/0812229/0812229111212000000000003.pdf. Since the calculator was originally made, the revised proposed plan and confirmed plan have been released. I have not had time to update the page references using these new documents, but I have made my best effort to ensure the changes in them are reflected in the calculations.
Assumptions
•There are 1,704,958,913 WAMUQ shares available. (POR 7 PDF Page 24)
•There are 20,000,000 WAMKQ shares available with a par value of $35,000,000 each for a total par value of $500,000,000. (Common knowledge)
•There are 3,000,000 WAMPQ shares available with a par value of $1,000 each for a total par value of $3,000,000,000. (Common knowledge)
•TPS (a.k.a REIT Series) has a par value of $4,000,000,000 and is currently classed as a preferred equity. TPS holders may choose to reject this POR (and forfeit any distribution to them) and rely on their pending appeal for a greater recovery. (POR 7 PDF Page 52)
•There are to be 200,000,000 common equity shares in the new company. (POR 7 PDF Page 39)
•Noteholders have the option to purchase up to 5 % of the 200,000,000 shares (which works out to 10,000,000 shares) if they choose to do so. (Revised Proposed Plan PDF Page 148)
•Preferred and common equity will split the new company shares after the noteholder shares have been subtracted from the 200,000,000. (POR 7 PDF Pages 24 and 73)
•Preferred equity (WAMKQ, WAMPQ, and TPS) will own 75 % of the available common shares in the new company. (POR 7 PDF Page 73)
•Common equity (WAMUQ) will own the remaining 25 % of the shares in the new company. (POR 7 PDF Page 75)
•DIMEQ was determined to be common equity and will share/dilute WAMUQ's 25 % ownership. (POR 7 PDF Pages 74 and 75)
•Some claims were subordinated to the level of common equity interests. The determination of their pro-rata shares will be found by dividing the value of their claims (which you estimated to be $500,000,000) by the share price at the close of business the day before the petition date (which is $1.69). This amount of shares will be added the the common's 1,704,958,913 shares in order to determine their ownership % of the amount available to commons. (POR 7 PDF Pages 74 and 75)
Calculation Explanation
•You anticipate noteholders will purchase 100.0000 % of the 10,000,000 common shares in the new company available to them (which works out to 10,000,000 shares). Subtracting this from the original 200,000,000 shares leaves 190,000,000 common shares in the new company available for preferred and common equity to share.
•You anticipate 0.0000 % of WAMKQ and 0.0000 % of WAMPQ will not grant releases (and forfeit their distribution). Taking this into account, the total WAMKQ&WAMPQ preferred equity is $3,500,000,000 ($500,000,000 for WAMKQ + $3,000,000,000 for WAMPQ). You anticipate 0.0000 % of the TPS holders not grant releases (and forgeit their distribution). This makes the total value of all preferred equity $7,500,000,000 ($3,500,000,000 for WAMKQ&WAMPQ + $4,000,000,000 for TPS).
•Therefore, WAMKQ&WAMPQ preferred equity own 46.6667 % of the total preferred equity ($3,500,000,000/$7,500,000,000).
•Because preferred equity is to receive 75 % of the 190,000,000 shares available, that leaves preferred equity with 142,500,000 common shares in the new company to share.
•With WAMKQ&WAMPQ preferred equity owning 46.6667 % of all preferred equity, that leaves WAMKQ&WAMPQ preferred equity with 66,500,000 common shares in the new company to share.
•If we split the WAMKQ&WAMPQ ownership into their individual classes, we find that WAMKQ owns 14.2857 % ($500,000,000/$3,500,000,000) and WAMPQ owns 85.7143 % ($3,000,000,000/$3,500,000,000) of the WAMKQ&WAMPQ preferred equity.
•Therefore WAMKQ owners will share 14.2857 % of the 66,500,000 common shares in the new company (which works out to 9,500,000 shares). Dividing by the number of WAMKQ shares (which have been reduced by 0.0000 % because of those not granting releases) shows us that each WAMKQ share would receive 0.475000 common shares in the new company.
•Likewise, WAMPQ owners will share 85.7143 % of the 66,500,000 common shares in the new company (which works out to 57,000,000 shares). Dividing by the number of WAMPQ shares (which have been reduced by 0.0000 % because of those not granting releases) shows us that each WAMPQ share would receive 19.000000 common shares in the new company.
•Because common equity will receive 25 % of the 190,000,000 shares available, that leaves common equity with 47,500,000 common shares in the new company to share.
•You anticipate DIMEQ will own 8.7700 % of those shares (which works out to 4,165,750 shares).
•Subtracting the shares owned by DIMEQ leaves 43,334,250 common equity shares in the new company for WAMUQ owners (and those holders of claims subordinated to common equity interests) to share. Dividing by 1,725,668,972 shares (which is found by taking the number of WAMUQ shares (which have been reduced by 0.0000 % because of those not granting releases) and adding the subordinated claim shares) shows us that each WAMUQ share would receive 0.025112 common shares in the new company.
•The estimated value per common share of the new company is simply found by dividing your estimated value of the reorganized company by the 200,000,000 shares available.
•The estimated value in the new company per each current WAMU security is simply found by multiplying the estimated value per common share in the new company by the number of common shares in the new company that we just determined the WAMU security would receive.
Conclusions
•Each WAMUQ share would receive 0.025112 common shares in the new company.
•Each WAMKQ share would receive 0.475000 common shares in the new company.
•Each WAMPQ share would receive 19.000000 common shares in the new company.
Other Useful Links:
Link to KCC LLC List of Documents, Washington Mutual, Inc. Case Number: 08-12229
https://www.kccllc.net/wamu/document/list
Link to KCC LLC List of Documents, WMI Liquidating Trust Case Number: 08-12229
http://www.wmitrust.com/WMITrust
Link to Purchase and Assumption Agreement
https://www.fdic.gov/about/freedom/Washington_Mutual_P_and_A.pdf
Link to Settle and Release Agreement (GSA)(December 13, 2011)
https://www.fdic.gov/news/news/press/2011/pr11192b.pdf
Link to Washington Mutual, Inc.: Delaware Bankruptcy Court Limits Debtors’ Release of Third Parties
http://www.jonesday.com/files/Publication/63effefb-e86a-4bff-92a5-576157cc5c91/Presentation/PublicationAttachment/324167d9-d483-4f5d-8452-5a13993688df/WaMu%20Third%20Party%20Releases%20BRR%20March_April%202011.pdf
Link to Confirmed POR7
https://www.kccllc.net/documents/0812229/0812229120224000000000001.pdf
Link to Declaration of Jonathan Goulding
https://www.kccllc.net/wamu/document/0812229120213000000000024
Link to Hearing Testimony of Slimeball Kosturos, 12/02/10
https://www.scribd.com/doc/63319846/Washington-Mutual-WMI-Closing-Argument-of-the-Equity-Committee-1st-Confirmation-Hearing-in-December-2010
Link to Where the Legendary $4B Went
http://www.businessinsider.com/wamu-gives-up-claims-against-fdic-and-jpmorgan-chase-in-exchange-for-6-billion-2010-3
If you want WMIH to be a public company, I have no objections. However, as Large Green likes to say, "look at their actions". With the exception of paying lip service to the SEC in the form of 8ks and 10ks, et al, WMIH acts like a privately held company. It is questionable whether they are required to file these reports, and it may simply be to keep the door open for possible future events.
I suggest all WMIH shareholders read up on offshore (tax/NOL) tactics, as they apply to privately held companies, and keep abreast of what Lehman is doing.
I am always right except when I am wrong, and I freely admit it is possible I am wrong. I recall one time back in 1969, I thought I was wrong, but I was mistaken. I eventually got over the trauma. (A little humor. Very little.)
Best regards,
David West
Your statement is basically accurate, however, it has nothing to do with "fiduciary".
LargeGreen.
The premise of your ongoing position, related to the escrow markers, hinges on the value of the mortgages, and rightfully so. Unfortunately, we do not know what the value of the mortgages is, or what the claims against them are.
The link below is to one of many studies on the mortgage-backed securities market, and how the marketing of these securities, based on loans that were risky, caused the Stock Market crash of 2008. This study is not all-inclusive, nor is any other study. However, collectively, they do produce a pattern followed by all of the players in the mortgage-backed securities market. Washington Mutual was a player. Underwater brain surgeons produce studies of this nature, and they aim their ideas at minds above the average, leaving the rest of us to founder in the shoals of illusion and guesses.
However, one can simplify a major aspect of selling mortgage-backed securities so that we can understand it and ask questions about it, as it applies to WMI/WMB. All players in the mortgage-backed securities market were guilty of the following aspect: It is legal to sell multiple mortgage-backed securities, using the same mortgage or bundle of mortgages. This practice often results in the mortgage-backed securities having a greater aggregate value than the original mortgage or bundle of mortgages.
Assume WMI/WMB invested $300k in a risky mortgage on a house, and sold securities to various investors, using the mortgage as a backing for the securities, totaling $400k. When the bad risk owner of the house can no longer make payments and defaults, which of the investors in the securities will own the mortgage on the house? Simultaneously, because the real estate bubble has burst, the market now values the house at $200k. The onus of debt to the security investor (hedge funds?) was squarely on WMI/WMB, and this is the reason OTS seized WMB and subsidiaries. The bank did not have the liquidity to repay the investors. The handiest money available was the deposits. FDIC could not allow that to happen. Do not fool yourself into believing WMI/WMB owed any of this money to the common shareholder. The value of our unsecured investment was in our stock shares. The mortgage-backed securities secured the investment of the big boys (hedge funds?).
If WMI/WMB received $400k for the mortgage-backed securities, where did the money go? They probably invested the money in other bad-risk mortgages. Bernie Madoff would be proud.
What if a mortgage in a bundle did not exist at all (through clerical error of course), or what if a mortgage was in more than one bundle? If the reported value of the WMI/WMB loan portfolio was $350b, how much of that figure reflected non-existent mortgages or duplicate mortgages?
My opinion on the outcome of the escrow markers:
Historically, they are worthless. However, hope is eternal. Sometime between now and the moment the escrow markers are deleted from our trading accounts we will know.
It is clear the true value of the mortgages is likely much less than reported, and the FDIC-R is now sorting through this maze of confusion. Assuming there is anything left after claims are resolved, the FDIC-R should return it to the Liquidating Trust where it will enter the waterfall. Only time will reveal the outcome. I think there will be value returned; how much is the question. Another question is who will receive the returned value? I know that sounds like an evasion, but speculation us futile.
My immediate concern is whether WMIH will be up-listed to a major exchange or not. The status of WMIH is that the BOD or CEO has not listed the stock to any exchange, and that makes WMIH a privately held company. If you recall, they made the statement early on during/or after exit that they might not list to any exchange. Anyone can trade on WMIH stock (as they are doing now) without the approval of WMIH. If the BOD or CEO does not list the stock, the shareholder will forever be in a fog of confusion and misinformation on what is fact or fiction.
Best regards,
David West
Link to study:
http://sociology.berkeley.edu/sites/default/files/faculty/fligstein/The%20Transformation%20of%20Mortgage%20Finance2.pdf
Fiduciary duties.
You have absolutely no concept of what a fiduciary relationship is compared to the more noble concept of the duties and responsibilities a family head has to its members.
Educate yourself:
http://cyber.law.harvard.edu/trusting/unit5all.html
Almost. Not quite.
Although any judge is an officer of the court, the jurisdiction of each judge is limited to the cases assigned to them. In an ongoing case, a criminal court judge will usually pass on to the appropriate District Attorney any criminal act he discovers (not pertinent to the ongoing case) worthy of investigation and prosecution. If the DA determines the evidence of the crime to have merit and files charges, the court system may or may not assign the case to the original judge. If it is a civil violation, the criminal court passes it off to the civil court, which relies on individuals and/or their attorneys to file charges. The point is the judge is not looking for other crimes, is concentrating on the case at hand, and will pass anything new on to the appropriate entry point in the court system. It is the same with bankruptcy court judges. They concentrate on the established procedures for the case at hand, which is to guide and referee the interested parties to an agreeable POR. It is not the responsibility, duty, or area of interest of the presiding judge in a bankruptcy court (WAMU) to investigate the cause of the bankruptcy, the seizure of the bank, the sale of the bank, or what FDIC-R is doing with the seized/sold assets. The interested parties should do that. Bankruptcy court judges limit themselves to those instances of the interested parties who do things in a fraudulent manner, such as lying or hiding assets, which are attempts to influence the outcome of the bankruptcy. This is the most important reason WMI/WMB legally hid the mortgages in plain sight as “exempt assets”. They did it so that they would not have to lie about them during the bankruptcy, and because they knew as far as the court was concerned – the mortgages did not exist. WMI/WMB used this tactic to affirm the statement that there was no money for equity, giving support to the further (attempted) tactic of cancelling equity.
When the EC wanted permission to file insider-trading charges against the bad-guys, they would have most likely filed the charges first with the SEC. The key here is that the presiding judge does not look for reasons to file charges outside the bankruptcy court, prevents it by not giving permission to file, and offers alternative courses of action. In our case, the presiding judge offered/threatened “Equitable Disallowance”.
No matter what the interested parties (debtors, creditors, and EC) said during the bankruptcy hearing, and no matter what numbers they bandied about for us to hear, we do not know what they and the court knows and cannot make correct decisions except those based simply on what we want. Additionally, none of the interested parties asked permission to file charges, except for the insider-trading incident.
A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances, which give rise to a relationship of trust and confidence.—Lord Millett
Both the debtors and the EC (not their attorneys) had a fiduciary relationship with the shareholders. Neither group was required to ask our permission to do anything they did, nor was anything they did illegal. We simply did not like what they did, and there is nothing we can do about it – nothing. If you think there is, take your evidence to an attorney and ask him to file a class action suit against whomever. The first visit is usually free.
The attorneys for the debtors had a fiduciary relationship with the debtors, not with the shareholders. The debtors did not have a fiduciary relationship with their attorneys; they did have one with the shareholders. The attorneys for the EC had a fiduciary relationship with the EC, not with the shareholders. The EC did not have a fiduciary relationship with their attorneys; they did have one with the shareholders. The presiding judge had a fiduciary relationship with the court and its proceedings, not with any of the interested parties or their attorneys.
I personally do not have, nor will I ever have, a fiduciary relationship with anyone. I know my duty to my family, my country and myself, and act appropriately in those areas based on my own standards and morals, not anyone else’s.
********
It is stupid and futile to feed, house, clothe, educate and arm any individual or group whose main goal in life is to destroy the way of life you have chosen for yourself, your family, and your country. Things work great in the mind, but we must test them in physical reality to have valid results. It is when people ignore the results of the test that we identify their faulty mindset. The world has tested socialism and found it wanting, while socialists cling to their fantasy even though it destroys our way of life. David West
Absolutely ludicrous.
No bankruptcy judge in any bankruptcy court is the super-hero protector of ANYONE. THEY DO NOT REPRESENT ANYONE. Their sole purpose is to referee and guide the DEBTORS (who requested the bankruptcy) and CREDITORS to a POR they both agree to; in the case of WAMU, it included the equity committee. IT DOES NOT MATTER TO THE JUDGE WHAT CAUSED THE BANKRUPTCY OR WHAT THE PARTIES AGREE TO IN THE POR. YOU, or anyone else, should direct your wrath in this matter toward the debtors or the EC. If there was any basis for filing charges, either criminal or civil, the debtors or the EC should have filed charges IN A DIFFERENT COURT, once they got the permission of the presiding BK judge. This is exactly what was going to happen when the EC and Nate Thoma had their fifteen minutes of fame in this matter. The judge did not want the EC to file insider-trading charges in a different court, and was not going to approve of the action. Instead, she threatened the bad-guys with “Equitable Disallowance” if the court-ordered mediation failed to resolve the matter.
Large Green,
Most bankruptcies border on lies and corruption. Nothing new there. Posters need to understand that the judge is simply a referee or guide, and has absolutely no fiduciary relationship to any party in a bankruptcy. They also do not care about lies and corruption. They concentrate only on guiding the parties to agreement.
Additionally, anyone expecting fair play in the market, or justice in a bankruptcy court, is simply naive. It is the reason that 80% of all investors in the market lose there money. I am in the 20% because I am knowledgeable on how the market works, and accept wins or losses with equal grace.
Best regards,
David West
Large Green,
It is my observation that the presiding judge (Walrath) has been getting a bum rap by posters because she did not do what they wanted. The truth is what they wanted had nothing to do with the outcome of the bankruptcy. She actually followed the rules of bankruptcy without wavering from the correct course, which included the threat of invoking "Equitable Disallowance" on several hedge funds.
One of my previous posts to you reposted:
If the EC had decided to file charges of insider trading against the ‘colorable’ Hedge Funds, they would have filed the charge in a different court other than the bankruptcy court, which did not have jurisdiction. However, the BK court would have had to give its permission. The Hedge Funds in question had less fear of insider trading charges than the threat of The Honorable Judge Mary Walrath to invoke ‘Equitable Disallowance’. This tactic meant the court would assign ANYTHING OF VALUE due to these Hedge Funds to Equity, leaving the Hedge Funds with NOTHING that might make it to the waterfall. Because the result of this tactic would have caused a lengthy fight (years) by all parties, the debtors, the creditors, and the EC came to a settlement.
When judging the conduct of the presiding judge in the WMI bankruptcy case, you need know only one thing. In accordance with the written laws and rules that govern bankruptcies, the job of the judge was to REFEREE and GUIDE the debtors, the creditors and the EC into a final bankruptcy exit plan, which they were to negotiate and agree upon amongst themselves. Whatever they agreed to, the judge would agree to (within reason), including cancelling equity. In no way do the rules require the presiding judge to represent the best interests of the debtors, the creditors, or equity. During this process, the creditors want as much as possible, equity wants as much as possible, and the debtors want the creditors and equity canceled. The presiding judge is required to referee and guide how these three groups come to agreement, not what the agreement contains.
The settlement came about because the debtors, the creditors, and the EC got as much as each group could get without prolonging the bankruptcy and without losing a great deal of money (the NOLs). The debtors wanted to distance themselves from the questionable conduct of WMI executives and the many ongoing lawsuits as regards the mismanagement of the mortgages, and they wanted the new company started within a timeframe which could capture as much of the NOLs as possible.
The (insider trading) creditors agreed to accept the settlement in order to (1) be part of the owners and managers of the new company, (2) to avoid ‘Equitable Disallowance’, and (3) to avoid insider trading charges, which the EC and Susman Godfrey and Partners could make in a different court.
Best regards,
David West
Large Green,
The correct answer to Carguy’s question is that the presiding judge was correct in her statement that she did not want to use up funds for a lengthy EC investigation. The funds she referred to were funds that reflected the value of the bankrupt estate. The $350B+ value of the mortgages was and is exempt from the open court bankruptcy. The FDIC-R, not having to abide by bankruptcy rules, should be liquidating the exempt assets and paying valid claims with any money received. Assuming there is anything left over, it should be returned to the Liquidating Trust, and enter the waterfall.
Don,
I think you are referring to my post which included the paragraph below. In it, I am stating that shareholders should be concerned if WMIH is not uplisted to a higher exchange, which was the original plan (stated by Kosturos in his deposition - I think).
The closing of the P&AA is a key event, which will finally separate the old from the new. The closing of the Receivership is also a key event, which finally separates FDIC-R from any future event. When these two events will happen is a closely guarded secret. At present, all indications are that any value returned will be very small.
Those of us on the WMIH side should be watching very closely to see if the BOD up-lists WMIH to a higher exchange. This should happen within a reasonable time after the closing of the PA&A and the consummation or official announcement that a merger has taken place. If they do not, you should be prepared to sell out instantaneously. The risk will be that the players will drive the PS down to worthless, and then they will find a legal way to sell WMI, leaving the common shareholder with nothing again.
Best regards,
David West
It is normal for any corporation the size of WMI/WMB to have a contingency plan. Sometimes the anticipated result of the plan, “Plan A”, becomes more desirable than the result of the existing business. Because the players planned how to initiate “Plan A” well in advance, the catalyst for this to happen was the crash of 2008
In the case of WMI/WMB, the value was supposed to be in the mortgages reported over the years. Apparently, the rat maize of selling and hiding the mortgages may have resulted in allowing WMI to skim the cash from the maize, and send it somewhere other than to the shareholders, leaving a hollow shell of paper mortgages and a confusing trail for anyone to follow. Another warped twist in the WMI/WMB bankruptcy was that the planners had allotted many of the mortgages to “mortgage pools” under the definition of “exempt assets”, which could not be discussed in the “open” bankruptcy proceedings. Therefore, the “behind closed doors” meetings, the redacted documents, and the sealed documents, which referenced the mortgages, took place. As far as the bankruptcy court was concerned, approximately $350B+ in mortgages did not exist, and no one could use their value in negotiating the outcome of the bankruptcy. Some of the creditors were also players in the plan, and already knew this aspect of the bankruptcy. However, they also knew the FDIC-R would return any value to the estate after they liquidated all seized assets, which, by law, included the “exempt assets”. They would also pay allowable claims before closing the receivership. The most important part of the plan was to cancel equity. The EC, Nate Thoma and Susman Godfrey & Partners prevented this maneuver.
When the presiding judge approved POR7, she guaranteed equity to have the same fair and reasonable recovery that anyone else was going to get from that point on. The only difference was that there were different classes of shareholders on the WAMU side of the bankruptcy, which would receive different levels of recovery. With the exception of having different levels of knowledge and different ways to get it, shareholders on the WMIH side of the equation are mostly the same.
One of the major things, mostly ignored by posters on this board, is that JPM owned millions upon millions of shares of WMB. I cannot locate my list of shareholders from that era, but I think Goldman Sachs was a very large shareholder too. There were other familiar names listed with very large holdings. Keeping in mind they all had their own special tentacles of moles and insiders vested throughout each organization, and because the outcome of the plan was very lucrative if the BOD cancelled equity, it is clear they and the WMI executives were the major players and designers of the plan. Third party lawsuits? I think not!
Several posters are adamant the escrow shares are relatively worthless, and base their analysis on all “open” court documents filed. They are accurate up to that point. Those posters who believe in value for the escrow shares live in hope the FDIC-R is adhering to the letter of the law (which they are), and will return “some value” to the estate for distribution. Only time will reveal the outcome. I think there will be value returned; how much is the question.
Those of us on the WMIH side should be watching very closely to see if the BOD up-lists WMIH to a higher exchange. This should happen within a reasonable time after the closing of the PA&A and the consummation or official announcement that a merger has taken place. If they do not, you should be prepared to sell out instantaneously. The risk will be that the players will drive the PS down to worthless, and then they will find a legal way to sell WMI, leaving the common shareholder with nothing again.
If they do up-list, hang on for a wild ride.
Mostly fact.
At last!
It would seem to me they have to leave part of a creditor class impaired to show the bankruptcy case was not a total fraud.
You may be the only one to date who understands this aspect. How it plays out will be the answer to many questions.
There is little doubt WMI wanted the bankruptcy, and planned it in detail long before the seizure.
Is there a link to a document showing these numbers?
It is possible my numbers are incorrect. If P's and K's are in the 75%, divide $18B by your favorite number and the result will be the answer you want. If there is a different formula to compute the correct result, i would like to see it so that I will be on track.
Thanks.
Assuming P's and K's are in the 75%, 3 times $4.29, or approximately $12.87 per share.
Assuming a 75/25 split of the $24B:
24B divided by 4 = $6B for WAMUQ
$6B divided by 1.4B = approximately $4.29 per share
Large Green.
If the EC had decided to file charges of insider trading against the ‘colorable’ Hedge Funds, they would have filed the charge in a different court other than the bankruptcy court, which did not have jurisdiction. However, the BK court would have had to give its permission. The Hedge Funds in question had less fear of insider trading charges than the threat of The Honorable Judge Mary Walrath to invoke ‘Equitable Disallowance’. This tactic meant the court would assign ANYTHING OF VALUE due to these Hedge Funds to Equity, leaving the Hedge Funds with NOTHING that might make it to the waterfall. Because the result of this tactic would have caused a lengthy fight (years) by all parties, the debtors, the creditors, and the EC came to a settlement.
When judging the conduct of the presiding judge in the WMI bankruptcy case, you need know only one thing. In accordance with the written laws and rules that govern bankruptcies, the job of the judge was to REFEREE and GUIDE the debtors, the creditors and the EC into a final bankruptcy exit plan, which they were to negotiate and agree upon amongst themselves. Whatever they agreed to, the judge would agree to (within reason), including cancelling equity. In no way do the rules require the presiding judge to represent the best interests of the debtors, the creditors, or equity. During this process, the creditors want as much as possible, equity wants as much as possible, and the debtors want the creditors and equity canceled. The presiding judge is required to referee and guide how these three groups come to agreement, not what the agreement contains.
The settlement came about because the debtors, the creditors, and the EC got as much as each group could get without prolonging the bankruptcy and without losing a great deal of money (the NOLs). The debtors wanted to distance themselves from the questionable conduct of WMI executives and the many ongoing lawsuits as regards the mismanagement of the mortgages, and they wanted the new company started within a timeframe which could capture as much of the NOLs as possible.
The (insider trading) creditors agreed to accept the settlement in order to (1) be part of the owners and managers of the new company, (2) to avoid ‘Equitable Disallowance’, and (3) to avoid insider trading charges, which the EC and Susman Godfrey and Partners could make in a different court.
CarGuy64, it is very simple.
Wamu only lost (Net Operating Loss = NOL) Washington Mutual Bank and its subsidiaries, and abandoned its WMB stock; the $300B+ in mortgages and loans were not lost. WMI/WMB hid them in plain sight as 'exempt assets', which were not a part of the assets used in the bankruptcy proceedings. However, they are not exempt from FDIC-R who is now liquidating them. If any money is left over after the FDIC-R has paid themselves, WMI/WMB’s creditors, and any other allowable claims, the cash will be returned to the liquidating trust to make its way through the waterfall.
Anatomy of a Bank Failure.
Almost everything you want to know about how it works.
http://www.klgates.com/files/Publication/75c34466-1733-4cee-ac60-70a3faf13402/Presentation/PublicationAttachment/38ad8050-02a6-4bde-acda-752a232c299d/Banking_Law_Journal.pdf
Termination of Receivership:
Once FDIC has paid all eligible claims and disposed of all receivership assets, it proceeds to terminate the receivership.
********
Keep in mind the FDIC-R (receivership) may not end when the Purchase and Assumption Agreement “Whole Bank” closes.
You may be correct.
1.02B is 60% of 1.7B.
However, if I remember correctly, several of the higher classes of stocks were converted to commons with a forward split, causing the number to increase to approximately 1.4B.
Some posters condemn Susman Godfrey and partners, but the firm does not involve itself in losing without an all-out Texas-size brawl. I do not know of any losses of note. They would have reviewed the entire scenario of Wamu, and felt they could win whatever the EC was after before they agreed to participate.
Additionally, if there were grounds for a class action suit, they would have filed it already.
Whatever they accomplished is a done deal, based on contingency.
Time will reveal what it will be.
The formula is:
75/25 split
Per $1B
$750,000,000 off the top
$250,000,000 divided by 1,400,000,000 for the rest.
Or: (rounded) $0.1786 for the twenty-five percenters.
For $10B the twenty-five percenters would get $1.786 per escrow share marker.
Willingham would get $1,786,000.00 for his $1M escrow share markers.
An excellent analysis by AZCowboy.
I would add that WMI planned the bankruptcy long before the date of the seizure. The filing of the bankruptcy itself was fairly boilerplate, but the intricate details of how to cancel equity and come to an agreement with all others in the form of a POR was complex. The key to the desired outcome of the plan was to cancel equity, which is normal in almost every bankruptcy.
Additionally, several things make it difficult to analyze what happened to the value of the estate, which was the prize being sought by the bad-guys. The value of the estate was in the mortgages and WMI/WMB hid the mortgages in plain sight, which the written law allowed. This act prevented all parties involved in the BANKRUPTCY from mentioning or using the value of the mortgages in the negotiations. It is similar to finding the murder weapon in a murder case, and having the judge disallow it because of how the prosecutor found it. It exists, but no one can mention it, not even in WithCatz DD about the BANKRUPTCY.
However, things are not that simple when dealing with an entity as large as Wamu. It is almost impossible not to mention the mortgages, and, in my opinion, the bulk of the sealed or redacted documents were those that did mention them. They had to be discussed, but could not be used as evidence in the outcome of the negotiations due to how they were protected by law. In other words, as far as the BANKRUPTCY was concerned, the mortgages (the value of Wamu) did not exist. Therefore, in line with existing evidence WithCatz is on track. The bankruptcy is over and there is no value to escrow.
The other difficult thing to keep in mind is the role of the FDIC-R, and the fact that during their receivership and accounting of the assets they can reference the mortgages (of all kinds) at will. Most of the posters on the board have a good idea of their role, but end up overlapping the role of the FDIC-R into areas that have more to do with the bankruptcy than the receivership and accounting of assets of the failed estate. It is difficult to fathom, but the bankruptcy, POR, and the reorganized estate are separate from receivership and accounting of the assets. However, because the estate is so complex, the umbilical cord will still be there until one or more future events cause it to be severed (such as the closing of the P&AA, the settling of all debt, and the disbursing of anything left over).
In addition, it would be foolish to think the closing pf the P&AA will resolve everything, and cause the waterfall to start flowing cash within days.
Mostly fact.
The Securitized Mortgages.
The link below is to the amended complaint by the Deutsche Bank National Trust Company, as trustee for the Trusts listed in Exhibits 1-A and 1-B (“DBNTC” or the “Trustee”), for its Amended Complaint (“Complaint”) against the Federal Deposit Insurance Corporation, as receiver for Washington Mutual Bank; JPMorgan Chase Bank, National Association; and Washington Mutual Mortgage Securities Corporation (collectively the “Defendants”)...
It describes almost everything you could want to know about how WMI/WMB set up the mortgages in question, and sold securities, using the mortgages as collateral. If you have read it before, read it again. Something new always jumps out at you each time you read it.
There is no doubt the value of WMB was in the mortgages. The questions remain (1) will there be any value left after all the issues are settled, (2) if so, the date someone (FDIC-R?) will return it to us, and (3) will the recipients be escrow or WMIH if any value is returned to the estate.
http://www.fdic.gov/bank/individual/failed/wamu_amended_complaint.pdf
I hope every common shareholder who survived to have their Wamu shares converted to WMIH reads the document reflecting the questioning of the individual at the link provided by Large Green (Kosturos I think). I hope you feel revulsion for this person and every person on earth like him who is in a position of power over a part of your fate, and understand the positive impact Mary Walrath, the Equity Committee, and its attorneys had on the outcome of the Wamu bankruptcy in your favor. To everyone involved in the bankruptcy, except these three entities, and I mean debtors, creditors, and all their attorneys, your existence in the scheme of things was less than a microbe on the rear-end of the universe. In their mind, you were less than you can possibly imagine.
All fact.
http://www.scribd.com/doc/63319846/Washington-Mutual-WMI-Closing-Argument-of-the-Equity-Committee-1st-Confirmation-Hearing-in-December-2010
ANICO (or 'The Bondholders') filed suit against JPM for spreading misinformation, which caused the downfall of Wamu. JPM attempted to pass it back to FDIC-R. Outcome unknown.
Two major problems with the mortgage pools are (1) the same mortgage often shows up on the list of two or more different pools, owned by the same entity (WMB/WMI). This is an indicator that the $700b-$1 trillion value of Wamu's mortgages was inflated; and (2) as investigators review the 'date added' of each mortgage, some of them were added to the pool after the legal cutoff date.
IndyMac had a nightmare trying to deal with FDIC after their seizure. FDIC confiscated all of their records and only made available to IndyMac redacted copies of documents and loans. This prevented an accurate assessment of what loans were on the books. FDIC ignored court orders to provide the records.
How can any corporation at that level not have duplicates?
Stupid is a permanent condition of the mind.
DECLARATION OF JONATHAN GOULDING, Page 7, Para 18:
On October 10, 2011 [D.I. 8780], this Court appointed the Honorable Raymond Lyons, United States Bankruptcy Judge, as mediator (the “Mediator”), and ordered the following parties to participate in the Mediation: (i) the Debtors, (ii) the Creditors’ Committee, (iii) the Equity Committee, (iv) Aurelius, (v) Appaloosa, (vi) Centerbridge, (vii) Owl Creek, (viii) the TPS Consortium and the TPS Group, (ix) the WMB Noteholders, (x) Normandy Hill, (xi) The Bank of New York Mellon Trust Company, N.A., (“BNY Mellon”), in its capacity as Indenture Trustee for the Senior Notes, and (xii) the WMI Noteholders Group (as such term is used in the September Opinion) (collectively, the “Mediation Parties”); provided, however, that Normandy Hill and BNY Mellon were not required to attend the Mediation.
http://www.kccllc.net/wamu/document/0812229120213000000000024
Based on all the indicators and conduct of several, including Willingham, I bought-in post-BK, knowing the risks, but instinctively knowing there was a buried body that someone would have to dig up someday. I have always bet my recovery would be in WMIH (I am already made whole+), with mild hopes that a dead body would surface, because the value of WAMU was simply too big to disappear the way it did.
Kudos to boarddork and others who found the dead body of WAMU in the Mortgage Pools. Knowing where WAMU buried the dead body is almost as good as the day the Trustee appointed the Equity Committee or the date of Nate Thoma.
Now that we know there actually is a dead body, it would be good to know other things about it. Such as its value, the date someone (FDIC-R?) will return it to us, and will the recipients be escrow or WMIH.
Does the highlighted section of DECLARATION OF JONATHAN GOULDING shown below mean WMIH, or does it mean the debtors own both WMIH and escrow? Does the word “property” mean desks, chairs, and pencils, or does it include the dead body? Many have long thought the debtors have never (maybe cannot until closure of PA&A) severed the umbilical cord, attaching WMIH to escrow. The biggest indicator to me that the value of the dead body will go to escrow is that the four hedge funds of insider trading fame valued the dead body more than jail time, more than equitable disallowance, and more than owning WMIH. If the value of the dead body does go to WMIH, watch for the uproar!
Notice the word "estates" is plural.
DECLARATION OF JONATHAN GOULDING located at this link:
http://www.kccllc.net/wamu/document/0812229120213000000000024
DECLARATION OF JONATHAN GOULDING, Page 15, Section 1123(a)(5) of the Bankruptcy Code: The Seventh Amended Plan and the various documents and agreements set forth in the Plan Supplement and other related documents provide adequate and proper means for implementation of the Seventh Amended Plan, including (a) the creation of a Liquidating Trust, pursuant to Article XXVII of the Seventh Amended Plan, (b) the transfer of certain property of the Debtors’ estates to JPMC, the FDIC Receiver, and the Liquidating Trust, as set forth more fully in the Seventh Amended Plan and Global Settlement Agreement, (c) the issuance and distribution of Cash, Reorganized Common Stock, Runoff Notes, and Liquidating Trust Interests, as set forth in Articles XXXI and XXXII of the Seventh Amended Plan, (d) the retention by the Reorganized Debtors of all remaining property of the Debtors’ estates, (e) the cancellation of all documents, agreements, and instruments evidencing Claims or Equity Interests in the Debtors, except as provided in Section 32.4 of the Seventh Amended Plan, (f) the surrender of all instruments or notes, pursuant to Section 32.6 of the Seventh Amended Plan, (g) the curing of defaults with respect to assumed executory contracts and leases, pursuant to Article XXXIV of the Seventh Amended Plan, and (h) to the extent applicable, the adoption and filing of the Reorganized Debtors Certificates of Incorporation and the Reorganized Debtors By-Laws, as set forth in Article XL of the Seventh Amended Plan and the Plan Supplement.
Mostly opinion.
Best regards,
David West
I have not looked closely at this, but Google "WMALT 2007-0C1". It is dated from 2008, and may be a starting point for DD on the subject of Mortgage Pools. Keep in mind my speculation that WMI would not wait until the last minute before filing bankruptcy to design the entire plan.
I have scanned POR 7 again, and nothing jumped out at me. Another angle is that WMB and not WMI had something to do with originating any action to protect the mortgages from bankruptcy. If so, it happened before the seizure and sale of WMB, and before bankruptcy of WMI.
Best regards,
David West
Looks like good DD, and would confirm my statement that it is sometimes legal to hide assets in plain sight.
Both are good points:
Two equal sides, "WithCatz on the far left, Large Green on the far right" ~ IMO, they are not equal; one is supported by all that exists while the other is based only on what can't be proven.
You have described “the unity of opposites”, first suggested by Heraclitus (ca. 535–475 BC).
Two opposite sides are never equal; they are opposing parts of a single entity. Physical reality and non-physical reality are opposing parts of the same entity, with the mind being located at the exact union of the two. A more usable example of this concept is how our voting process works. In an election the “center”, which is comprised of people who cannot decide if they are conservative or liberal, determines the outcome. The liberals on the far left are the close opposite of the conservatives on the far right, and both groups have already made up their minds before the election. WithCatz and Large Green have opposing viewpoints. When our fate removes the escrow markers from our accounts, the winner will be whichever of the two that ends up with the most toys. Due to facts in plain evidence, it currently appears WithCatz will be the winner of the opposing viewpoints, and the outcome for all of us will be the value of WMIH.
Keep in mind, fact is stranger than fiction, and we do not yet know our fate.
Regarding the "owner of the money to fund the mortgages" ~ wouldn't that be the "depositors?"
As a depositor, what part of your bank do you own, other than your deposit?
A parent company owns all of its subsidiaries and all of the value of the subsidiaries. The corporate veil protects the parent company (WMI) from the actions a subsidiary (WMB) might commit during its business life and in certain legal situations. For example, because of the veil, the bank (a corporation) is responsible to its creditors and its creditors cannot sue the parent (WMI) if the bank fails or is seized. The part of the seized and sold bank that is nonreturnable to the parent is the deposits, the buildings, and the pencils, etc. The part that is returnable to the parent is the difference between the assessed value of the bank minus anything owed to its creditors, and minus anything owed to others as an expense incurred due to the seizure and sale. In the case of WMB, there are good mortgages and bad mortgages owned by WMB (not the depositors). The bad mortgages are subject to recourse by WMB. The OTS seized the bank after the FDIC had warned WMB multiple times in many lawsuits to clean up their act. The danger was that WMB was foisting bad mortgages onto FNMA and others, and did not have the cash to pay the recourse. The closest cash to use for the recourse payments was the deposits, and FDIC could not allow that to happen. There is more detail than we will ever know, but that is the simple version. Legal or not, ethical or not, the rest is irreversible history.
Mostly fact,
Best regards,
David West