Think about it this way.......the LT only has jurisdiction over "certain" assets inherited from the Chapter 11 Bankruptcy and is reflected in the bankruptcy court AND the LT filings.
- Other than Washinginton Mutual Capital Trust 2001, Have the hundreds of legacy mortgage investments in safe harbor, or WMI's legacy participation income ever been included in either the POR 7, or the LT filings? No
- The examiner report mentions that these were not available nor included in the scope of his report.
- Judge Walrath shut down the Equity Committee from speaking about any assets outside of those listed in the original court filings.
-Therefore, since safe harbored mortgage assets are not part of the bankruptcy, they cannot all of a sudden appear part of the LT's jurisdiction. How can the LT have authority, 75/25, over something its bankrupt parent never retained nor declared as up for grabs while in the courts custody? If WMI had been able to declare these assets in court, there never would've been a bankruptcy allowed in the first place. Or if allowed - than yes, the LT would've listed them in their filings all these years. But they didn't because they can't, because safe harbor is an automatic trigger during bankruptcy and receivership.
- 75/25 is the filter for "certain" LT liquidated assets as declared in filings, and as disclosed to the court.
- Generally speaking, Safe harbor laws protect these income asset interests, in case the debtors (or the FDIC receiver's assets with a bank holding company different from WMI's unique legacy charter) are not enough to cover its liabilities. In our rare case, we know A > L..........and we have our escrow cusips as proof.
- A debtor in bankruptcy does not have to bankrupt all its assets and liabilities. A Chapter 11 means reorganization, not liquidation in Chapter 7. The debtor chooses which liabilities and creditors to cram down, and which "certain" assets will be declared in excess of the liabilities for reorganization, and subjected as collateral to the debts declared. Remember WMI's looooong subsidiary list? Only 2 Chapter 11 bankruptcies filed, out of all of the others that were not sent to JPM. Some survived outside of Bankruptcy and others were used for fuel in the bankruptcy fire like WMRRC.
Its a genius plan really, declare and keep just enough assets to the court, and keep their head above water to cover liabilities at any given time, and legally shelter the crown jewels off balance sheet, to be retrieved later on. No wonder stock options are an important part of executive compensation packages !! Bankruptcy forces all creditors of the entire enterprise to take a haircut, while using only a portion of the assets to put out the fire. The debtor reaps the discount paid with cash assets at hand - as disclosed to the court and publicly.
Not only did the 2008 banking disaster create cover for the FDIC to Take WAMU to shore up JPM, but it also created cover for WMI to unashamedly play the poor pauper role, while only really using less than 50% of their actual total enterprise wide assets (declared to the court or not).
