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Is there a reason that this could not have been a 363 sale? Does the FDIC have the authority to do a 363 sale?
Is DIMEQ a security? If the fiduciaries, the DIME BOD, the Warrant Agent, the WMI BOD and their lawyers had done their jobs properly, they would have perfected a security interest in the claim that was spun off to the passive DIME shareholders who depended on them to protect their interest as shareholders receiving the contingent claim. If these fiduciaries had done their job properly, the WMI BOD would not have been able to turn over that 85% interest in the proceeds of the Anchor Litigation to JPM.
Instead, we have had a situation where the Warrant Agent has been unable to protect the interests of the shareholders who received the contingent interests as would be the case if a secured interest in the claim had been perfected. The fiduciary responsibility now rests on the shoulders of the WMI BOD as successors to the DIME BOD
Correction: joint and several.
Bluzie and the other more astute posters,
Do you think it would be easier to get a large recovery for the estate from the D&O insurers if the LTW holders and the Debtors had negotiated a settlement with substantial recovery for the LTW holders or if the judge issues a ruling that LTW holders are Class 12 with joint and severable liability for the WMI BOD as well as WMI?
That's the American Savings litigation settlement, not Anchor.
I would add this as a middle paragraph:
The LTW vehicle is intentionally defective for this purpose, so that if challenged, and it does not survive the primary purpose of conveying litigation proceeds to stronger, insider hands more deserving of pecuniary gains than passive outsiders, at least the intentional defects will provide full employment for an army of the finest litigators who are known for the excellence of their work in turning incomprehensible legal doccuments into clear, concise and error-free Plans Of Reorganization and deserving of the highest billing rates in the legal profession - and even more.
Did I miss something? Was there some statement to indicate that mediation failed?
99.44% That's the purported purity of Ivory Soap!
Thank you 56Chevy
How do the Debtors get to the minimum 9%recovery of $74M? Is this assuming that DIMEQ is in Class12 for the full $337M recovery ahead of WAHUQ in Class16? Then, if DIMEQ is deemed to be equity, wouldn't the WAHUQ recovery be $74M+$337M= $411M?
Allowing for three extra months of Post Petition Interest at $15M/month, the midpoint of the Debtors estimate of $14M to $16M PPI per month, the WAHUQ maximum recovery would seem to be $411M - $45M = $366M. That's $116M more than the maximum projected recovery of $250M. Where have I gone wrong?
Thanks The Grudge,
Let me rephrase the question: did SNH control the PIERS before the Chinese Wall went up? I think I remember seeing an old post to that effect.
56chevy,
How does the potential $250M recovery in this scenario square with the 9% recovery rate anticipated in another section? What causes the big difference?
Do the SNH Control the PIERS?
Phillip, You may be double counting. The way I read the plan, WAMU stockholders get 30 % of the new stock unless we are deemed to be equity. Then, they have to split that 30% equally with us, giving us 15% of the reorganized Debtor.
Plus, there seems to be a $250M/ year cap on the limit of their policy, but I don't know if this is cumulative or what the exact terms are. :(
The Grudge, if it happens that we are way out of the money, say Class 21, would we still be able to go after the directors and their D&O insurance? What about the JPM attorneys that were conflicted in getting our claim transferred to JPM without their having to pay us our 85%?
Thank you Grudge. You certainly have demonstrated that you know more about the innards of this case than anyone else with your fly on the wall view of the case in the courtroom and out.
I think there is a good argument that the LTW holders deserve to have an equitable lien or secured interest in the right to receive 85% of the Anchor Litigation, especially as our fiduciaries have let us down. However this might throw a monkeywrench into the GSA and confirmation of a POR, something the judge wants to happen. Therefore, it may be that our class representatives have chosen not to push for this to make it easy for the judge to agree with our other arguments that we clearly have a claim.
If judge Walrath determines we do have a claim that would qualify for being in Class 12 as the preponderance of evidence indicates, we will be as well off if not better, in a confirmation that is not unduely delayed, than if we had a secured claim on the Anchor litigation and had to wait for that to play out. The Judge is aware, by her statements, that she has the option of taking the other route. Going that other route still depends on her finding that we have a claim. That finding is the key that is necessary to unlock the value of the LTWs for their rightful owners. :)
Judge Walrath didn't buy the last argument you stated that 85% of the litigation proceeds were intended to flow to the Debtors' balance sheet and become the property of DIME/WAMU. She corrected Adam S. on this point in oral argument at the end of the trial.
Ambiguities in the warrant agreement and other doccuments should be interpreted in favor of the LTW holders because the second party to the agreement, the recipients of the LTWs, were passive, unsophisticated persons who wern't able to bargain when the warrant agreement was drawn up. :)
Why would DIMEQ get anything in a cram down when class 18 is out of the money in the current waterfall? Isn't interest paid in a cram down?
Any info about Rosen's prediction of a possible settlement of the equity mediation, possibly tomorrow?
Would the letter have been more likely to have gotten the judge's attention if it had been filed under the adversary number?
Correction: I meant to say, "claiming 100%, not merely 15%".
Philipmax and Goldcanyon, how would it be to our advantage if Judge Block should decide that JPM is not the successor to the ownership/custodianship of the Anchor litigation. I presume the FDIC is claiming all of the litigation rights, not merely 85%. is this correct?
Yes! Very well done, The Grudge.
Jimbell, I agree that there was no negative significance to the judge's final remark. It was made after she went out of her way to extend gracious courtesy to Art, whose summary was a tour de force. A. Str. made a complete ass of himself as he whined at the LTW's strong arguments and offered no rebutals except misleading twists of the facts.
Jmbell, I listened to that final exchange with the judge and got a slightly different nuance. Art was finishing his rebutal to the lame seven points made by the attorney for the unsecured creditors. He refuted the last point about being too late for the LTW's to make a claim by referring to the reserve fund set up by the judge being available fore the LTW's. Judge Mary properly corrected him by stating that the money will be available "if you have a claim" as is proper since she has not yet issued her judgement.
Is there an allowance for the $63M possible enhancement to the award in the $337M reserve that Judge Walrath has set aside as the potential maximal value of our claim if she rules in our favor?
It's sad, but it's not possible to multiply by zero. There is no money available for everything below PIERS and probably zero for PIERs as well. In this type of situation, however, there is usually a bone thrown to equity to make them go away when they have a creditable claim of malfeasance such as insider trading, lowball appraisal, etc. This is what the current mediation is about. :)
Correction. I meant to say: before the judge decided to use the FJR.
Correction. I should have said: before the judge decided to use the FJR.
Unfortunately, Grudge is almost certainly correct. My analysis came from a different direction. I added up all the claims above PIERS and then calculated the accumulating interest due, including using the contract rate when applicable. This was before JMW made her decision to use the contract rate. Then I compared how much the classes above PIERS were to receive and how the remainder available for PIERS compared to what the estimated recovery was for PIERS at that time. That estimation for PIERS by The Debtors was close to my calculation then.
I don't think the analysis would change much now using the FJR because my understanding is that the subordinated classes down through PIERS will have to pony up the difference between the two rates to the classes above them that had a higher contract rate.
Yeah, except I saw in an insurance publication that the Debtor's D&O policy is capped at $250M/yr. :(
I believe the judge then agreed with the debtors that she had made a mistake and set the reserve amount at $337M.
The Estate is not paying the LTW holders legal expenses. That males it even more galling to see the abuses as one hundred attorneys slaver at the trough like hogs without a care in the world about how they are unnecessarily eating up The Estate with the maximum charges they think they can get away with.
Correction: compounded annually per JMW
Thank you Grudge,
The burn rate has been estimated to be about $5M+ lawyer bills plus monthly interest. The FJR at time of petition was about 1.95%, to be compounded monthly per JMW. How much is that times the current value of the estate, divided by 12? Is that a good approximation of the current monthly burn rate?
Thank you Grudge for your helpful reply. Will you kindly explain how the waterfall flows now with the FJR being used and the contractual subordination in place. Will more or less money be flowing down to the PIERS and how much assuming a plan is confirmed within four months?
Your helpful reply will be greatfully appreciated.
Please explain how it will put equity farther out of the money if the LTWs are put in class twelve. Wouldn't the LTWs as class 20 still be ahead of the equity classes?
Thanks, grudge. I appreciate your clear statement of the strength of our case. :)
The revised warrant agreement clearly says that The Debtors own the LTW litigation. Therefore, they can trade it away, but there are consequences because they are then not able to fulfill their obligation to receive the proceeds and distribute 85% to the LTW holders.