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What happened to the lawsuit?
Anyone know anything about what happened to the lawsuit vs IMH with regards to the preferred shares? Did Curtis Timm & Carmac settle with IMH and if so, how does that impact IMPHP and IMPHO shareholders? Anyone with info willing to give us an update?
Thanks in advance!
Settlement?
It sure smells like some type of settlement is in the works based on the recent updates to the Timms vs IMH case. The previous trial date in August was cancelled and no new trial date has been set.
Anyone else have some insights or know what's going on?
Hmm, it is curious that the court date scheduled for next month is cancelled. However, this doesn't necessarily mean that there's a settlement in the process. There's a block date of 7/20. It's quite conceivable that a new court date will be set on 7/20.
IMH was recently added to Russell 3000 Index (as of 6/19/2015)
Here's the official link to the Russell index website:
http://www.russell.com/indexes/americas/tools-resources/reconstitution/additions-deletions.page#indexes
If you search for "Impac" on the list of Additions, you will see Impact Mortgage listed there.
Looks like Pickup is picking up more shares!
RHP and his associates are apparently buyers at around $17-$18 range. He's been actively snapping up shares around that price in decent quantities. Good news for IMH longs.
I didn't swap out my IMPHO for IMPHP because...
IMPHO had a nice run-up lately and I was also holding onto IMPHO because it had been going up. Now that it's leveled off, I'll probably make that swap pretty soon. IMO, both preferred shares have nice upside now that IMH is doing much better financially. But IMPHP has some nice upside in case Curtis Timms wins the lawsuit.
To put the lawsuit in plain english for non-legal types:
Preferred B shareholders should NOT be able to vote on amendments on Preferred C shares.
Preferred C shareholders should NOT be able to vote on amendments on Preferred B shares.
Or put it another way:
Preferred B shareholders should ONLY be able to vote on Preferred B amendments.
Preferred C shareholders should ONLY be able to vote on Preferred C amendments.
If Timms wins his argument, then:
Preferred B received < 66.6% of the required votes to pass the amendments to Preferred B shares (IMPHP). The amendments would NOT have passed and would not have taken effect.
Preferred C received > 66.6% of the required votes to pass the amendments to preferred C shares (IMPHO). The amendments would pass and take effect.
If IMH wins their argument, then:
Preferred B and Preferred C are the same since they are both preferred shares of IMH stock. The overall vote of B and C shareholders combined was > 66.6% to effect the amendments. The amendment would pass and take effect.
You do the math.
It has everything to do with the class of treatment of the 2 classes of Preferreds. Read the Legal Memorandum on the Maryland District Court website:
http://www.courts.state.md.us/businesstech/pdfs/mdbt1-13.pdf
Excerpt from the above legal document from official Maryland Court website:
DEFENDANT:
Defendants argue that plain language of the Articles Supplementary defeats Plaintiff?s claim. According to Defendants, the number and percentage of consenting Preferred B shares alone is irrelevant because the Articles Supplementary allow (and in fact, require) voting of
Preferred B and C shares together as a class. Under this interpretation of the Articles Supplementary, the only vote tally that matters is the total percentage of all Preferred Shares that were tendered and consented, and failure to obtain consents from holders of two-thirds of the Preferred B shares alone does not prevent a valid amendment of the Articles.
PLAINTIFF RESPONSE:
First, Plaintiff asserts that the Preferred B and C shares do not have “like voting rights” in this transaction. He argues that Preferred C shares cannot have like voting rights as Preferred B shares because they have no voting rights with regard to Preferred B shares.
...
Plaintiff?s argument would conclude that Preferred C shares would never have the ability to participate in a class vote on amendments to the Preferred B Articles Supplementary.
...
and so on...
To summarize, Timm's argument is that a vote on Preferred C's articles should have no bearing on Preferred B's articles because they are not the same.
5. Concerning lawsuit, the court order is pretty clear on claim 1, that in order to make the proxy stand, 2/3 of each class much vote for change. Thus the judgement is for both classes of preferreds, if IMPHP wins, IMPHO also wins. IMPHP getting paid while IMPHO getting nothing is absolutely nonsense.
Actually, you make an interesting point. If you truly believe this to be the case, then it's very likely that both IMPHO and IMPHP will lose this lawsuit. Why? Because the combined vote of IMPHO and IMPHP shareholders DID in fact breach the 66.6% threshold. So if you believe IMPHP and IMPHO should be treated the same and should be categorized together -- then the votes for both classes should count as one vote and the 66.6% requirement is met making the amendments valid.
However, per Curtis Timms' argument vs. IMPAC MORTGAGE -- he's basically saying IMPHO and IMPHP are two completely different entities and should not be grouped together as one entity -- i.e. their votes, their terms, their dividend payouts, their articles, etc. are in fact, different. So while the 66.6% threshold was exceeded in the case of IMPHO shareholders, they were not reached by IMPHP shareholders.
So if you truly believe both classes of preferreds should be have the same treatment and the judge agrees, then it's likely Curtis Timms will lose his case. On the other hand, if you believe IMPHP and IMPHO should receive different treatment because they are different entities -- then Timms could win his argument and IMPHP shareholders would certainly benefit. However, in the scenario above -- since it was decided that the 2 preferreds are DIFFERENT...it's up to the judge to interpret how that applies to IMPHO so the same ruling would not necessarily apply to IMPHO (NOTE: IMPHO did receive > 66.6% of the YES vote meeting the threshold). Again, this is all speculation and it's really up to the judge.
DISCLAIMER: I am NOT a lawyer and this is just one shareholder's opinion of the case. I am also long IMPHO, IMPHP and IMH stock.
IMPHO vs IMPHP differences
- Judges are human and the ultimate ruling can be quite unpredictable. What may seem logical to you may not seem be logical to the judge who's opinion is the only one that counts -- not yours. The judge could very well rule in favor of IMPHP and say that same ruling does not apply to IMPHO. There's a variable premium to that possibility which is reflected in the price of the two preferreds.
- The preferred shares pay differently. 9.125% vs 9.375%. A small 0.25% difference but a difference nonetheless. This also applies to the potential for retroactive dividends in case the ruling favors both IMPHP and IMPHO. IMPHP sharedholders will get more $$$.
Disclosure: I am long shares of both IMPHO and IMPHP as well as the common stock.
IMPHO vs IMPHP risks
Ok, I rattled on a bit on my last post so I will just put it plainly.
1) In order for IMPHO shareholders to profit, IMPHP needs to win. There's no path for IMPHO shareholders to profit unless the argument for IMPHP wins.
2) The same argument does not apply for IMPHP. IMPHP shareholders can win even if IMPHO shareholders are left out.
3) #1 and #2 are true because IMPHP received less than the required 66.67% required votes. IMPHO did receive the required number of votes.
4) Even if IMPHP shareholders win, there's no guarantee IMPHO shares will benefit. There's certainly a viable scenario where the judge rules in favor of IMPHP but rules against IMPHO.
As I stated in my previous post -- Judges could have a completely interpretation of the law than us board posters. There's an inherent risk there that the judge sees things differently for IMPHO vs IMPHP which is why IMPHO is valued at roughly 1/2 of IMPHP right now.
RE: IMPHP vs IMPHO
I've reading the replies and I'm going to chime in here.
Full disclosure: I am long both IMPHP and IMPHO. (More P less O)
I think we can all try to pretend to be the lawyer or judge trying this case but the only opinion that truly matters is what this particular judge thinks of the language and the case being tried.
Please keep in mind: We can all argue and reason as to which side has the better argument or how the legal language is spelled out on the amendments -- but at the very end of the day, it's still a human judge with his/her own personal opinions on the case that truly matters. And this judge will rule based on his/her own interpretations.
That being said -- here's my personal view on the lawsuit and as an investor, why I like IMPHP more
If Timms wins and IMPHP and the amendments are nullified, then it's a sure win for all IMPHP shareholders. Plain and simple, IMPHP wins and that's that. No additional risks there.
I'm order for IMPHO shareholders to win, they need IMPHP to win AND win a secondary argument that says IMPHO on is on par with IMPHP. You can all argue the merits of that all you want but at the end of the day, it's still a human judge that decides. Right or wrong, the judge's opinion is the only one that matters. And yes, judges make mistakes too.
My point is that there is clearly more risk with IMPHO than IMPHP and that is why the market has prices the shares as so.
Joe:
This is pure speculation but I feel that IMPHP is a far better risk to take than IMPHO. The price difference between the two stocks indicate that most investors agree as IMPHP is trading for almost twice as much as IMPHO right now.
The problem here is that IMPHO actually did receive the 66.67%+ votes required for the articles to be amended. IMPHP did not.
It's entirely possible that the judge rules that the amendments to IMPHP were invalid because it did not receive the required % of votes -- while the amendments to IMPHO were valid beacause it did.
If that were the case, IMPHO would be the status quo while IMPHO could possibly be entitled to retroactive dividends (this could be quite significant), 2 board seats, etc. That would make IMPHP extremely valuable.
Now, I'm not a lawyer but if I were to take a wild guess as to the outcome -- I suspect the judge may rule that IMPHP amendments are invalid because it did not receive the 66.67% votes (seems logical no?) while IMPHO amendments were valid because it did.
Please keep in mind -- I am not a lawyer and I am long IMPHP shares. So please do your own due diligence.
There were 5 claims against the defendants in the Impact vs Timms case.
From what I've read about the court case, I believe the 3 (out of 6) counts that were dismissed were basically (in plain english, not legal terms):
1. The officers didn't breach their fiduciary duties.
2. The officers are not personally liable.
3. There are no punitive damages.
The outstanding, unresolved claims are really the meat of the lawsuit (IMO). They claim that IMH:
1. Failed to get enough votes to amend the articles for IMPHP.
2. As a result, the amendments to the articles are invalid.
The following memorandum summarizes the claims quite well.
http://www.courts.state.md.us/businesstech/pdfs/mdbt1-13.pdf
IMPHO/IMPHP Lawsuit Update (1/12/2015) latest entry
For those of you interested in following the case updates on Timm vs Impact Mortgage, here is the official link from the Baltimore, MD district court where you can see the case progress. The last entry was dated 1/12/2015.
http://casesearch.courts.state.md.us/inquiry/inquiryDetail.jis?caseId=24C11008391&loc=69&detailLoc=CC
Its also interesting to note that Camac Fund LP was permitted by the judge to join the lawsuit on the Plaintiff side (on 3/14/2014).
From everything I've read so far on the court website, it looks like the case is in discovery mode and progressing.
I've been following ALSC for several years now and own some shares. As you all know, there was a FINRA ruling that went against ALSC last year relating to their arbitration against JP Morgan. The stock tanked shortly after.
The volume has been pretty dead following that ruling. It certainly does not mean that ALSC doesn't have a strong case about being misled into buying the Ambac Auction Rate Securities. They can still certainly sue again -- and recent rulings against big banks may bolden their positions there.
As for the millions of shares traded pre-market at $0.20. My only thought is -- they were bought double yesterday's close(last close was $0.10) so someone obviously wanted these shares pretty badly and in a large quantity. There's been so little volume on this stock that it's a pretty big shock to me to see how much volume changed hands without any new news.