I've always wondered why it was expressly stated that all inter-company claims between WMI and WMIIC would be transferred to the WMILT. In past 10Q's filed by the Trust they indicate that inter-company claims with WMI's subs that were merged and dissolved were eliminated. I do not recall any mention that the WMI-WMIIC inter-company claims were treated with in the same manner, so they could possibly be active. Here is my analysis (in red) of the info you posted.
Quote: "the Bankruptcy Code does not alter the treatment of valid intercompany claims. Like all other claims against a debtor, claims of a parent, subsidiary or affiliate against a debtor(collectively, “Intercompany Claims”) are entitled to pari passu treatment with claims of unaffiliated third party creditors having the same priority"
This seems to indicate that once the inter-company claims are of the same priority as Creditor claims, they must also be paid.
Quote: "they often are separately classified and afforded different treatment under chapter 11 plans of corporate debtors, particularly those with complex corporate structures. In many cases, there are no distributions under a chapter 11 plan on account of Intercompany Claims between and among debtors in the same corporate family who are reorganizing in jointly administered bankruptcy cases. Instead, such claims are reinstated. The reinstatement of Intercompany Claims preserves a means for the reorganized corporate family to move cash between related entities on account of the repayment of Intercompany Claims after the company reorganizes, which may be more efficient and cost-effective than transferring funds via dividends."
This part is most interesting in that it seems to confirm AZ's theory that WMIH, as owner of WMIIC would be in a position to reinstate any inter-company claims between WMIIC and WMI (now WMILT). There are a few issues that need to be resolved in that the WMILT is not part of the WMIH corporate structure but is a related entity to a small extent. The fact that the WMILT owns these inter-company claims though is important to note. This subject requires analysis by persons with greater knowledge on this subject.
Quote: "Complications may arise when distinct corporate entities within a corporate family have different assets and liabilities owed to third party creditors. Whether or not Intercompany Claims are recognized and respected may significantly impact the recoveries of third-party creditors. Creditors may insist that Intercompany Claims be taken into account when calculating the recoveries of third party creditors at different corporate entities. Even when Intercompany Claims are taken into account when calculating recoveries to third-party creditors, Intercompany Claims may still be reinstated as part of a chapter 11 plan so that they can be used by the reorganized company to efficiently transfer value within the reorganized corporate enterprise."
This part is irrelevant IMO since it deals with Creditor issues of which WMIH Corp currently has none. It also is not applicable since the inter-company claims were retained solely by the WMILT, NOT WMIH and again the LT is not a part of WMIH's corporate structure. The only avenue for WMIH's involvement is where it can utilize it's 100% ownership of the former WMIIC's equity interest. This could mean that WMIH would have managerial control of former WMIIC assets/interests but would have to transfer all cash benefits to the WMILT, as owner of the inter-company claims. On the surface it would seem that AZ could possibly be right to some extent.
AIMHO
FACTS...NOT EMPTY RHETORIC!!!
