Mr Cooper Group Inc (COOP)

[deekshant]

Retention of Claims-&-Causes of Action-&-Transfer To Post-Conf.-LT

Retention of Claims & Causes of Action & Transfer To Post-Confirmation Liquidating Trust

It’s a thought process within the possibilities that brings some clarity and direction that in no way is complete. Corrections, improvisations, … are welcome. I got lost somewhere in between so just sharing the little that I could capture. I have twisted some copied text (minor changes) and presented it how it fits our needs. Thanks for reading and AIMHO :)

WMI as debtor in possession only addressed claims against itself on account of insolvency within the bankruptcy court along with 4 billion SJ. Absent Bankruptcy filing WMI had claims against FDIC C&R that were preserved in GSA and resided outside BK jurisdiction. Through reorganization, creditor’s claim (WMI as “Creditor”) is succeeded by the Liquidating Trustee overseeing Bankruptcy Estate. Equity claim (WMI as “Sole Shareholder”) was abandoned by the Bankruptcy Estate and no value was determined. And, on account of insolvency equity claim was non-existent and any value there in currently unknown (WMI as Sole Shareholder of WMB) was transferred over to WMIH. WMI and WMIIC as debtor are succeeded by WMILT as successor in interest of WMI and WMIIC… Before I touch on the claims, think out loud, how can a debtor be deprived of its own property because of insolvency on account of seizure that the BK court has no control over. WMILT as successor has three claims against the seizure independent of P&A. 1) Property seized owned by WMI e.g Bank branches leased to WMB 2) Equity value in WMB e.g. 6.5 billion “Capital Contribution in Exchange for Equity” 3) FMV of WMB residing outside of BK jurisdiction.

There is another asset within the trust account on account of securitization and safe harbor that due to legal isolation resides outside of BK court and FDIC and is recorded off book. I term these as “retained assets” within a custodial account. (have no proof for confirmation purposes). And, only with respect to these trust accounts, no litigation is needed as they were never a subject of a dispute. (Conjecture)

[quote author=boarddork link=topic=6941.msg92555#msg92555 date=1424817850]
[quote author=WithCatz link=topic=6941.msg92083#msg92083 date=1424298638
And do you understand what "safe harbor" is? It's so that MBS purchasers don't have their assets seized by the bankruptcy process.

2) the FDIC isolates securitized loan pools from a receivership for safe harbor to protect it from bankruptcy/receivership and the Insured Deposit Institution (IDI) is allowed to keep it off the books. https://fdic.gov/news/board/10Sept27no4.pdf
For any mortgage assets 'held in portfolio' by WMI, unsecuritized and unsold, lent by WMI's own cash and held for its own personal benefit (def. of portfolio loan); the FDIC procedure through the RTC, is too convert these into MBS, which the bank in receivership IS ALLOWED TO KEEP IT OFF BOOK.

Confirmation is not the end of a Chapter 11 case, as there is usually a need to collect, administer, and distribute estate assets of a Chapter 11 debtor after the confirmation of the plan. These tasks are commonly performed by some sort of Post Confirmation liquidation Vehicle (PCLVs), especially liquidating trusts. PCLVs allow a Chapter 11 debtor to focus preconfirmation on the more pressing needs of its reorganization or liquidation while deferring issues regarding illiquid estate assets, causes of action, and claims reconciliation until after confirmation of its plan.

A continuing business which undergoes a successful Chapter 11 reorganization experiences three stages: (1) as a prebankruptcy debtor; (2) as a bankruptcy estate, or debtor in possession; and (3) after confirmation of a plan of reorganization, as a post-bankruptcy business.

Similarly, courts have found continuity through the next transition that a case may take through post-bankruptcy business. This amounts to pursuing claims and causes of action transferred by the debtor,

C. RETENTION OF CLAIMS AND CAUSES OF ACTION AND TRANSFER TO PCLVS.
The Chapter 11 plan should provide for the retention after confirmation and the transfer to the PCLV of any assets necessary to make up the liquidating trust, including any claims or causes of action to be pursued. In order to provide the PCLV with standing to pursue the claims and causes of action transferred by the debtor, Code section 1123(b)(3) presents three general requirements, which are discussed in turn below. The first requirement under section 1123(b)(3) is that “the plan must retain the claims to be asserted.” http://www.lplegal.com/sites/default/files/pdf/Publications/JF%204_07.pdf

For our purposes, it is sensible to view the debtor-in-possession as the same “entity” which existed before the filing of the bankruptcy petition, but empowered by virtue of the Bankruptcy Code to deal with its CLAIMS AND CAUSES OF ACTION and Property in a manner it could have employed absent the bankruptcy filing.

Furthermore, the plan may provide that all property of the estate does not vest in the debtor. Therefore, when property revests upon confirmation, it remains outside the estate upon conversion.

Supreme Court’s ruling in Bildisco “leaves open the possibility that distinctions between the debtor and the debtor in possession may be appropriate in other contexts.” Id. at 622. The court held that a conversion after plan confirmation was one of those times where there is a difference between the debtor and debtor in possession and pointed out that a debtor can own property that is not property of the estate, and all property of a debtor need not be committed to the plan. (I threw this in as new info without having any clue as to how it applies. So, just sharing) The context was a conversion from Chapter 11 to Chapter 7
https://supreme.justia.com/cases/federal/us/465/513/

Because the debtor has different duties and responsibilities upon confirmation, does not mean that the prefiling debtor, debtor in possession and postconfirmation debtor are distinct entities or that a debtor is no longer a debtor under conditions not specified in the Code.

Despite the emergence of the reorganized debtor, however, the effective date does not mark the end of a bankruptcy case. Generally, after the effective date, the claims reconciliation process must be completed, as well as distributions to creditors made, assets recovered and liquidated, and litigation pursued for the benefit of the debtor’s creditors.

[quote author=azcowboy link=topic=10730.msg167821#msg167821 date=1483800228]
The study and research of the - WaMu - process has been an evolutionary event, including many people ... and in my opinion, will become financially serious to the owners of the original estate "tracking marker holders" ... this year 2017' as the FDIC completes its portion of the GSA, ... and as the WMI-LT quickly, nears the end of its defined' life span ... March 6, 2018 ...

The trust instrument must contain a fixed or determinable termination date that is generally not more than five years from the date of creation of the trust and that is reasonable based on all the facts and circumstances. If warranted by the facts and circumstances, provided for in the plan and trust instrument, and subject to the approval of the bankruptcy court with jurisdiction over the case on a finding that the extension is necessary to the liquidating purpose of the trust, the term of the trust may be extended for a finite term based on its particular facts and circumstances. The trust instrument must require that each extension be approved by the court within six months of the beginning of the extended term

Generally, a grantor trust is treated as an entity to which a number of beneficiaries have contributed assets in exchange for a proportional interest in the trust’s assets. In the bankruptcy context, the distribution to creditors of beneficial interests in a liquidating trust (that is taxed as a grantor trust) is generally treated as though the following had occurred: (a) the debtor had transferred the assets earmarked for the trust to the creditors in satisfaction of their claims, and (b) the creditors contributed the received assets to the trust in exchange for beneficial interests in the liquidating trust.
http://www.lplegal.com/sites/default/files/pdf/Publications/JF%204_07.pdf

mm03-1212_8ke101.htm Page 22 of 57
http://sec.gov/Archives/edgar/data/933136/000090951812000099/mm03-1212_8ke101.htm 5/7/2012
(iii) Subject to Section 6.8(b), any determination to retainTrust Professionals and any compensation arrangements for such Trust Professionals, it being understood that the Liquidating Trustee initially intends to engage Weil, Gotshal
& Manges LLP, Quinn Emanuel Urquhart & Sullivan, LLP and such other counsel as
may be appointed by the Trust Advisory Board from time to time to litigate Disputed
Claims;
(iv) Determination of the amount and timing of any distribution to the Liquidating Trust Beneficiaries;
(v) Any determination to initiate lawsuits or proceedings;
and
(vi) The dissolution of the Liquidating Trust.
The foregoing shall not limit the Liquidating Trustee’s ability to make determinations and take actions
regarding compliance with tax withholding requirements (including remittances).

https://www.boardpost.net/forum/index.php?topic=8099.msg113747#msg113747