Mr Cooper Group Inc (COOP)

[Dmdmd2020]

The “underwriters stipulation” dated as of March 28, 2013 stems from an indemnification claim against the debtor (WMI) where the underwriters wanted $96 million for legal fees and settlement costs regarding a class action suit against WMI and its underwriters which started in November 2007. That suit wasn’t resolved until June 30, 2011.

http://securities.stanford.edu/filings-documents/1038/WM_01/2011630_r01t_08CV00387.pdf

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Definition of Debt Security Underwriter

“Debt Security Underwriters
Underwriters purchase debt securities, such as government bonds, corporate bonds, municipal bonds or preferred stock, from the issuing body (usually a company or government agency) in order to resell them for a profit. This profit is known as the "underwriting spread." An underwriter may resell debt securities either directly to the marketplace or to dealers, who will sell them to other buyers. When the issuance of a debt security requires more than one underwriter, the resulting group of underwriters is known as an underwriter syndicate.”



Read more: Underwriter https://www.investopedia.com/terms/u/underwriter.asp#ixzz5VndNaAvG


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IMO...my conclusions as of November 03, 2018:

1) The underwriters (Morgan Stanley, Credit Suisse, Goldman Sachs), didn’t settle their claims (per the “underwriters stipulation” on March 28, 2013) until after POR7 was approved (March 19, 2012).

2) Per the the “underwriters stipulation” on March 28, 2013, the underwriters didn’t want Class 18 claims of $24 million. Instead, they settled for Class 19 claims of $72 million.

3) if the underwriters wanted cash, they would have opted for Class 18, which is paid before Class 19, and is more likely to be paid than Class 19 claims.

4) what the underwriters settled for was a Class 19 claim that is less likely to be paid than a Class 18, and they would have to wait a lot longer.

5) it’s obvious the underwriters know exactly the risk and probability of claims being paid out, and even a lower value of $24 million Class 18 claim is better than waiting for an unknown duration of time for a Class 19 claim.

6). IMO...These underwriters know exactly how long it will take the FDIC to unfreeze the bankruptcy remote assets (i.e. MBS Trusts) after the bankruptcy cases are closed. And the underwriters know exactly how much is waiting to be returned to Class 19 WMI Escrow Marker Holders from the MBS Trusts.

7). I believe that the underwriters probably know that Class 18 and Class 19 would probably get paid in close proximity of time from each other, if one knows the process and speed and magnitude of how much the FDIC will unfreeze in bankruptcy remote assets.

8. IMO...remember, these same underwriters have underwritten many other MBS Trusts for other failed banks in the past and they know the process, and know how to get paid from bankruptcy remote MBS Trusts.