Two WaMu Bankruptcy Filings Explained-Why They Tried So VERY Hard to Zero Equity but Failed!
AZCOWBOY has so graciously shared his work and I truly want to thank him for all of his research, fact finding and above all - his integrity! I am sure most investors who invested in former WaMu equity and signed timely releases share my thanks and enthusiasm!
So, was the following' part of what no one was ever supposed to know' ? ... or, ... was ever supposed to study, research and find out ? ...
When WMIIC filed for Chapter 11 Bankruptcy Protection on 09/26/2008, ... along with WMI' following a close second' ... the relationship between these two corporate entities became legally changed' ... No longer was WMI considered to be the Parent Corporation and WMI Investment the subsidiary, of the same' ... but, at the simultaneous filing for Bankruptcy Protection, they now became known and referred to as ... "The Debtors" ... legally protected equals ...
Equal Treatment under the law' was mandated and allowed by the Delaware Legal System, ... again, both were allowed to be treated as equals and each' filer, under their individual request for Chapter 11 protection, to be given the same allowances allowed by the law' ... "debtors" ... and ... "debtors in possession" ...
So, ... WMIIC initially filed as we know, reporting no creditors and no debt' ... while, WMI filed with the infamous reporting of $32 B in assets and $8 B in liabilities' ... and, so the WMI open court fight began' ...
Now, anyone that follows my posting here, for the larger group, has read my study and postings of the First Day Filings ... or, ... as I like to refer to as the preplanned events' accomplished to secure the massive WMI value within Investment, for an eventual bankruptcy exiting new company' ... 09/26/2008 - 12/08/2008 ... but there is more' ... much more'
In November of 2008, ... The Court, without request or provocation Ruled that no assets or value would be allowed to be transferred or comingled between these TWO debtors without her explicit permission' ... She' Judge Walrath, had already allowed for the procedural combining for administrative convenience of these two', ... however' ... that is where she made sure it ended' ... nothing of value could be moved from one to the other, without her explicit' permission' ...
The devil is in the details' ... as the documents portray and specify to, ... without any debt or creditors listed in WMIIC(s) request for Chapter 11 protection' ... only' ... items of value actually owned by WMI Investment could be considered by the court' ... nothing else' ... nothing that WMI Investment held and serviced for any other entity' ... again, ... ONLY what Investment actually owned could be considered within its own filing for Chapter 11 Bankruptcy' ...
With No creditors listed ? ... there would be no questions' ... and ... for anything actually owned by WMI' which was being maintained and serviced by Investment ? ... WMI' itself would have had to file a creditors claim against WMIIC' ... which of course was never going to be allowed to happen' ...
So' ... WMIIC(s) bankruptcy filing allowed for the consideration of WMIIC(s) owned items only, ... Not, what it was servicing or maintaining for other entities, including its own original parent corporation ... Washington Mutual, Inc' ...
... so remember, ... the newco' has now exited bankruptcy, reorganized, and has been realized as a Nasdaq publically traded company = WMIH-Corp ...
WMIH-Corp, which continues to own the "equity value" in WMIIC' ... its own current' reported and designated subsidiary ... while the original owners of the WMI Estate, the releasing legacy shareholders, via their received tracking markers, ... own, the actual "asset value" in the same' ... WMI's massive asset value, which had been originally protected within WMIIC ...
again, ... as the documents reveal' ... only' ... items of value actually owned by WMI Investment were allowed to be considered in bankruptcy, not what WMIIC was maintaining and servicing for any other entity' including WMI' ... without a creditor claim ever being filed against it'
... a legally genius plan ? you betcha' ... and' ... completely supported within the KCC and SEC filings'
... don't miss those footnotes ...
(1) -- Represents the market value of cash and cash equivalents and investment securities owned by WMI Investment Corp. and disclosed in its schedules of assets and liabilities
... only, the cash, cash equivalents and investment securities actually ... owned' ... by WMI Investment Corp, were needing to be considered' ... no debt ? and no creditors filed ? ~ no need to consider anything WMIIC managed and serviced that WMIIC itself ... did not own ...
... There IS More' ...
As everyone now knows, after I began this study and research, of the - Great WaMu Case' - back in mid to late - 2012' (after the reorganization, and ... after I had released all of my holdings - uq's, P's & K's) ... obviously, I have found this three plus years of study and research, extremely intriguing' to say the least' ... however, ... again, there is more' ...
As explained within this threads beginning, ... with WMIIC' filing for Chapter 11 Bankruptcy protection first, and, legally considered to be simultaneously Filed' along with WMI's BK Filing, ... again, with zero creditors and zero debt reported or scheduled' within its own (WMIIC) filing, ... and ... value considerations of only' what WMIIC actually owned, could be considered' ... the steps were placed in motion' ... now, hold that thought for a bit' ... this next documented function, was never intended to be uncovered' ... yet, uncovered it has become' ... and ... is documented within the filings' ...
... so, we have now discussed the Filing for Chapter 11 Bankruptcy Protection initiated by WMI Investment' ... let's now move on to the Washington Mutual, Inc. Filing for the same Chapter 11 Bankruptcy Protection' ... (WMI's)
WMI's filing was substantially different' ... in that it filed for Chapter 11 Protection listing $32 Billion in assets and $8 Billion in liabilities' ... now, in doing so, ... WMI legally presented itself to the Court to be in quite a positive financial position' A>L' ... A positive financial position WMI' took at the onset, in its initial Filing' to be required by the legal process, to be mandated to consider all classes of involved security holders' ... Yes' ... including the equity' classes' ... and ... hold on to your chairs' ... it actually did' ...
So, ... WMI' ... filed for Chapter 11 Protection, and was given an extended time frame to list creditors and claimants' ... once filed (2009), ... all creditors were obviously listed, ... however, ... along with the creditors, so were the pre bankruptcy equity holders listed and given a ... "contingent / disputed / unliquidated" ... status' ... again, ... ALL PRE BK' Class Holders, ... including equity class holders, who were not only listed, but considered to be an "Unliquidated General Unsecured Rule 510(b) Claimant" ...
So within the Filing For WMI(s) Bankruptcy ... Weil' ... as the debtors (plural) representation, protected all of the involved security holders of record, with a general unsecured claimant designation' ...
only' ... the security purchases made after' the Filing of the Bankruptcy's were not to be considered' ... everyone involved in the WaMu pre bankruptcy ? ... was initially protected' within the future that was originally planned' (well, almost everyone I figure)
Moving Forward;
Plan 6, (had it been approved) ... was designed to address the creditor classes, ... then the ... general unsecured claimants ... and then, the ending class to be the catch all' ... a hybrid creditor class security, or a piers class 16 security' ... that was able to and designed to be able to exceed its original face value' ... and that' was supposed to be the end of story' ...
However, ... That is not how things actually worked out, as Plan 6 obviously failed' ... and the PayOut Matrix as described in Attachment H' was redefined' within the settled result and approval of Plan 7' ... capping a piers security within Tranche 4, and moving general unsecured to a Tranche 5 designation, ... and ultimately' ... ALL EQUITY CLASS Recipients to a Tranche 6 - ending and final result' ...
Remember' ... Double Dipping is legally - Not' - allowed in Bankruptcy' ... So, the pre bankruptcy participants, which had been converted by Weil' to be considered a general unsecured recipient, ahead of a piers recipient' ... were now moved to be inclusive of ALL equity participants, both pre ... and ... post the bankruptcy' filings' 09/26/2008
So, ... with Weil as the debtors representation for ... both' ... WMIIC and WMI' ? ... as a solvent debtor ? we should not have ever needed equity representation' ... Weil's error, in my opinion was the consideration of the settling term sheets with the snh's and obviously greed' ... as, IMO' the Trustee got wind of'
... In my opinion ? ... Had Weil' ... disconnected from the SEC upon the filing of the bankruptcys' and eliminated the securities from trading ? ... or ... having made a decision to not do that' ... incorporated ALL equity participants into the process ? via some sort of settled result prior to being forced to ? ... things would have been quite different' ...
However, ... with the financially driven need' to pacify the snh's and the bond holders ? ... we obviously have now seen the final result' ... lines were crossed, and the Federal Court threatened them all with ... "equitable disallowance" .... which would have ended up, screwing everyone ...
... So again, ... when, an equity' participant, pre bankruptcy, was converted by the debtors representation, "Weil" to be considered as a general unsecured claimant, (again, a solvent debtor) ... they actually limited the amount of recovery' allowed ... with a class 16, piers hybrid creditor class attempting to be placed in the ending position, and in a position to receive all that was to come back from the original WMI estate' ... along with ownership of the reorganized company'
... Plan 7's approval eliminated all of that' ... capping the 16's recovery, ... and ... allowing the removal of APR and eliminating any equity class restrictions on returning value' ... to be received and shared at a 75% / 25% ratio' simultaneously' ... along with ownership of the newly reorganized company'
... To the innocent and honest individual shareholder ? ... both' pre and post bankruptcy ? ... Plan 7's approval, worked out to be much, much, much better'
AZ
AI
