is making moves.
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Thank you for the thorough write-up. Much appreciated.
While it would be nice, I don't we can or should expect an offer on Monday. Given the last two times WMI and/or JPM has conceded, we should probably expect something to happen on the morning of the next hearing. Hopefully I'm wrong on the timing of these negotiations though - I would sleep alot better over the next two weeks knowing settlement was a certainty before the next hearing.
Agreed. I just didn't want to speculate on that as I have no idea what he's trying to file under seal.
I am just as frustrated with the proceedings as you are and woke up this morning skeptical of today's hearing. However, in spite of the frustration and skepticism, I frankly can't imagine any way for our adversaries to further obstruct this case. Their cards are out on the table and Walrath is well-aware of their relatively hostile position to the EC. The examiner would bring everything to light and it cannot be appealed - and Susman is clearly not playing games or wasting time/resources. Accordingly, as reluctant as I am to get excited only to be let down once again, I think something has to happen soon. This case should have been settled well over a year ago. The EC rightfully and successfully regained control of this bankruptcy and now we're on track to where we should have been last year - on our way to a real settlement.
P.S. Thank you so much for the feedback Gmenfan. I really appreciate it and I'm glad that you liked the paper. If you have any questions please feel free to email me and I would be happy to discuss in more detail - either via telephone or email.
Discovery was thrown into the backseat after the volley session between Walrath and Rosen in the last hearing when the court realized that WMI would do anything and everything to obstruct a reasonable investigation (via discovery) by the EC. Discovery would lead to Motions for Protective Orders (as filed by JPM and threatened by the FDIC) and more consumption of the estate's resources and the court's time. An examiner would be the most efficient solution as it would lead to an unobstructed investigation of everything - or at least the scope of things set forth by the court.
Exactly - and since the outcome of today's hearing would have been very much in our favor (and to WMI/JPM/FDIC's detriment) it must have been worth more to the EC than a victory in the courtroom through appointment of an examiner.
Thanks Diamond. Much appreciated.
Your point might be correct if the EC wanted discovery more than it wants the examiner. There are two things to keep in mind here: (1.) the outrageous lack of disclosure and outcome of the last hearing where Walrath encouraged the EC to file a new motion is enough to support the notion that the examiner is a near-certainty, regardless of whatever fairy dust Rosen conjures up in opposition; and (2.) the discovery and document turnover was an alternative to the examiner - it wasn't the EC's preference, it was it's alternative when the Judge thought WMI, JPM and the FDIC would play fair.
The question isn't whether Susman has the power to delay anything because I'm almost certain he wasn't the one seeking it - the question is why Susman agreed to the delay in the first place. The hearing was scheduled to take place this morning and the outcome was seemingly certain to fall in the EC's favor. Accordingly, why would our counsel agree to an adversaries request for adjourment of such a desirable and imminent outcome unless there was something better to be obtained by the delay in the first place?
I'm not so sure about that. I respectfully disagree because the EC's primary objective was the appointment of an examiner - and after that motion was denied it sought to pursue the avenue of discovery under Rule 2004 as directed by the court. Once it became clear to the court that WMI was really a hostile party and adverse to EC interests, Judge Walrath reconsidered her prior decision and essentially gave us the green light to file another motion - indicating that she would rule in our favor provided that she has the jurisdiction and authority to do so. Accordingly, if the imminent appointment of an examiner - which happens to be one of our biggest bargaining chips aside from any valuations conducted by PJS and/or "smoking gun" documents - was adjourned in exchange for "an understanding with respect to the multitude of issues" then I believe it's because they're prepared to come to the table with an offer for shareholders.
In short, Susman would not have agreed to the adjournment of examiner unless our adversaries (WMI, JPM and the FDIC) were ready and willing to engage in serious good faith negotiations.
That's just my humble opinion.
They are two different legal systems - we have an adversarial system while Germany has an inquisitorial system. The relationship between the judge and counsel is very different in both.
Rosen is a snake along with the rest of the culprits behind this debacle. They don't show their true colors until they bleed - and today's hearing would have left them with such a beatdown if the examiner or discovery was granted and disclosure statement was denied.
The decline in JPM price could very well serve our interests because it will put us in a better position for a 1:1 swap. We know JPM stock will bounce back up, so at least we'd be a part of that ride if this is how the settlement plays out.
I have a feeling that a new settlement agreement will be reached between WMI, JPM, FDIC and the EC as the basis for the new DS/POR and it'll include a conversion of WMI stock for JPM stock. All creditors would be covered and existing WMI shareholders would simply get converted to JPM's outstanding shares. That would sure look alot better than additional claims and liability from an examiner's investigation or a major cash payout to fund a global settlement.
Exactly. Today confirmed our theories that Dimon would bend before ever allowing documents to be disseminated and a real investigation of the WaMu seizure to take place. Today we discovered that Dimon finally pulled out the checkbook. All that remains is for us to determine how much he's going to pay - and I don't suspect it'll take much more time.
I'm hoping for real fireworks over the fourth of July this year.
If I recall correctly, he was admitted to the Delaware Bankruptcy Court pro hac vice, so he is not a member of the Delaware bar.
I'm sure that's just the tip of the iceberg. However, as a legal professional Rosen should be held to a different standard and made accountable for his actions to the ABA and NYSBA.
Gentlemen, I am feeling very optimistic about tomorrow's hearing. We are well poised for a favorable outcome on the Motion for Appointment of an Examiner.
After reading through the reply papers filed by the EC I really just have to wonder how the hell someone like Rosen is still practicing law. He has clearly violated the canon of ethics and his duty of professional responsibility to the debtors - which for all intents and purposes should include its owners and/or equityholders. The fact that he is acting with such defiance with so much attention on him in a massive bankruptcy before a highly respected judge bewilders me.
I believe in karma, but being a student of the law I never thought one could get away with such a clear and obvious abuse of the system as we see here. I'm sorry I have been swamped and unable to get on board with most of the discussion lately but I assure you that the outcome of this case is very important to me and I plan to make my feelings known to the court very soon. I am working on a letter to the court and will be sending courtesy copies to the American Bar Association and New York Bar Association soon enough. I need this settlement just as much as you do and I'm not about to let a crooked, fraudulent, traitor like Rosen get in my way - or in the way of justice - if I can help it.
The EC has won many battles on our behalf, but tomorrow will dictate the outcome of the war. Goodluck to all and Godspeed.
Judge Walrath isn't an appellate judge - her concern isn't to review his application of the law on a shareholder meeting, it's to move this case through the bankruptcy process and apply equitable remedies wherever necessary. Moreover, federal law preempts state law, so if this issue ever ended up before Judge Walrath again her decision would overrule his.
This only indicates that he didn't know which direction he was going to rule when he entered the courtroom, which is odd, because if he applies the law it is relatively straightforward - unless there is contrary authority that preempts the standards of corporate governance and states shareholders cannot hold a meeting during the bankruptcy process. Lets hope he has a spine and does what's right.
Listened in for a few minutes and all I can say is this Washington State Judge is a disappointment. He clearly does not want to get involved - makes me seriously wonder whether someone "bought" his silence to buy some more time.
Exactly. Thank you for explaining, Mordicai.
Leaving for class in twelve minutes - i'll read it tonight and post some feedback afterwards. If you can, send me a PM to remind me later this evening!!
lol, I would pay to see that.
Thanks Knick, I started up my summer class on Remedies last week and have been pretty busy looking for a new job and catching up on things in my spare time. I'm pretty excited about the 17th but trying to keep myself calm and collected as no one knows what kind of stunts Rosen will try to pull.
I heard that too - but that was in regards to discovery, not an examiner. Moreover, any motion for a protective order would have to be approved by Judge Walrath.
They have no choice but to comply.
As to your point, I listened in to most of the last hearing and heard opposing counsel challenge our discovery requests - arguing privilege, scope, unreasonable burden and just about every other excuse in the book. On the contrary, the only objection that I heard them make to the examiner was preclusion on the basis that we had already filed an appeal and thus the matter was out of Judge Walrath's jurisdiction. They had no challenge to the filing of a new motion or the appointment of an examiner under appeal.
An examiner is directed by the court to conduct an analysis, whereas an independent party (i.e., the equity committee) moves the court for discovery and disclosure to conduct their own. If the judge grants an examiner, the parties are bound to comply because the examiner is acting on behalf of the court - and in the absence of compliance, the defiant party(ies) face contempt.
In short, the appointment of an examiner would be the better of the two alternatives because it would allow a thorough, unrestricted evaluation of what really happened and provide us with the most transparency possible.
For what it's worth, I'm very excited about today's hearing and have very high expectations for a favorable outcome - namely the contentious discovery motions that are under dispute and the rancid DS/POR that WMI hopes to get through the door. There is no way the judge is going to grant the DS/POR and there is no way she will deny our Rule 2004 discovery motion.
In the very worst case scenario, she might allow our discovery as to certain parties - i.e., JPM and FDIC - but restrict us from obtaining discovery from others - i.e., GS and Federal Reserve. However, I doubt we will see restriction as Sussman was very particular in his motion papers and avoided the inefficiencies of WMI's "extended" Rule 2004 Motion that Walrath cited in her denial. Lets see what happens - I wish I wasn't at work so I could actually tune in!
Agreed. I am very confident that she will grant our request - regardless of what kind of garbage JPM/FDIC/WMI present in opposition.
Indeed. It's all about the time value of money. JPM is probably hoping to settle this with WMI's money so it can say it acquired WaMu for free. No doubt in my mind they're getting the better deal out of this - I just hope we get the justice we deserve, and soon.
Thanks Fish!
Walrath has been fair and equitable. I hope she stays that way going into the next few hearings because it is imperative that we get discovery rolling. As for her denial of the motion for an examiner, I believe no one would make a better examiner than Sussman.
Glad to be back. It's been a crazy couple of weeks having wrapped up my final exams and heading out to Costa Rica for my buddy's bachelor party. I'm still trying to catch up with things but I'm really happy and excited to see Sussman zealously representing the EC. This guy is good and I have a very good feeling about everything. We are in very capable hands.
I believe the federal rules recently changed but they should have about 10 business days or so to serve their answer, after which the EC should have about 5 business days to serve our reply. I'm not sure whether they are on an expedited schedule though so don't quote me on that timeframe.
I think Sussman is pushing to have the motion heard before the court on June 3rd, so we should be expecting a response early next week. As an aside, I'm happy to know that our adversaries will be working through the Memorial Day holiday weekend to get it done.
Anytime Biz!
Sussman isn't positioning the EC to settle. He is quickly and effectively building our case against JPM and solidifying our opposition to the DS/POR. He has been in the kitchen with the gas burners on high ready to serve us JPM on a plate - and if the case settles soon it's because the heat is too much for them to handle.
IMO this is by far the best litigation tactic for us. JPM has stalled this case way too long and escaped not only free of liability (thus far) but might even end up with add'l cash to boot (via the proposed settlement). Sussman has no time to engage in negotiations, but if JPM offers a sweet deal then he'll listen.
If everyone is referring to Sussman's motion for discovery and examination under Rule 2004, then the reason she has not signed off is because our adversaries (JPM/FDIC/WMI) are entitled time to answer - after which we will file and serve a reply and then argue the motion in court before Judge Walrath.
Steel, I've answered your question to the best of my ability below noting the probable issues that might arise and my conclusions thereafter. I also offered my advice. Please take it all with a grain a salt as I took a few minutes to write from the top of my head and don't have much experience yet as a law student.
Here are the issues with your request:
(1.) The Equity Committee
The EC is acting on our behalf and representing our interests in the bankruptcy proceedings. I don't believe it is either required or necessary for individual shareholders to file objections to the DS/POR. Moreover, it would be unreasonable and unduly burdensome for the court to expect shareholders to act outside (and in addition to) the committee. I haven't because of these foregoing reasons.
(2.) Joinder and/or Survival of the Claim
Even in the event that you/we were required to file the objections, you basically need to have a few things - (a.) a legitimate claim for relief and (b.) standing in the bankruptcy proceedings to assert that claim.
In order for you to have standing in the bankruptcy court (and since your claim is directly related to the bankruptcy proceedings therein), you would need to retain counsel and file a motion seeking joinder - which would allow you to become a "party" to the proceedings. The problem here is that your motion will almost certainly be denied because the court will likely hold that your interests are being represented by the equity committee. At best, you can try to join the EC - but then you'll have to be careful with the sale/purchase of WAMU stock since there might be a conflict of interest due to the availability of inside information. If you are not a party to the proceedings or filing your motion through the EC then it will be dismissed for a lack of standing.
If the court granted your request for joinder, the next issue would be the assertion of a legitimate claim for relief. If you don't have a duty to answer/object then its going to be very difficult to assert that Rosen caused you any harm. On the contrary, Rosen will argue that the costs were self-imposed and accordingly seek to dismiss your complaint. If you sought to assert fraudulent conduct, you would probably have to follow the heightened pleading standard of FRCP Rule 9(b) in your complaint - and asset with particularity the grounds under which your claim of fraud is based.
In light of the issues, here is my advice:
(1.) Well Written Letter to the ABA and NYSBA
Draft a well written letter to the American Bar Association and the NY State Bar Association bringing up specific examples of Rosen's conduct as well as the breach of his duty of care to the estate by dropping valuable claims against JPM/FDIC in exchange for a highly unfavorable settlement. You should cite the EC's Motion for Rule 2004 Discovery and the facts showing that Rosen neither deposed nor fully investigated the claims (or merely sought to withhold the findings of his investigation from the EC) because this would be a material breach of the Model Rules of Professional Responsibility. However, if he has the informed consent from the WMI BOD to act in this manner, then he would not get in any trouble and instead the liability will likely fall on the officers of WMI - which will hopefully be ousted after our shareholder meeting.
(2.) Well Written Letter to the EC
Draft a well written letter to the Equity Committee and ask them to try to seek sanctions under FRCP Rule 11 for intentionally misleading the court and possibly even shareholders who thought they were required to personally object to the DS/POR, and sanctions under FRCP Rule 26 for discovery and disclosure violations. In the absence of egregious conduct, attorneys are usually hesistant to jump out and seek sanctions against and adversary. I'm sure Sussman is planning on filing such a motion in the near future - especially if Rosen gets in the way of our Rule 2004 discovery.
Good luck, Steel.
-RR
Steel, I'm swamped at work but I'll try to address your question by the end of the day.
That's right, I remember you said you were getting married this month. Congratulations to you and your spouse, XOM!! I hope you enjoyed your honeymoon in NYC.