About the 75/25 split..
Hello Bbanbob,
i think you can argue both sides about the ''75/25 until the end'' and both groups have their arguements.
After all it is up to you and to me to decice four ourselves which side we prefer.
We cannot do anything about it other than to wait for the final outcome.
But both groups, doesnt matter if you in the ''75/25 until the end camp" or you think otherwise, most of us believe there is something for us, how much will be seen :).
After saying that let me bring up a post by a well known poster back in April 2012:
Thanks to sleepless from boardpost:
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,,The question: if LTIs were to be distributed on account of old equity holdings (i.e. classes 18 and above had claims 100% paid), would the distribution follow the "waterfall priority scheme" which would give class 19 priority over 21/22, or would it follow a 75%/25% split as for Newco commons?
The former implies that class 19 would have to be 100% paid before class 21/22 could see any distribution, whereas the latter implies that classes 19,21,22 are pari passu and any distribution would go to all classes at the same time.
Boston Stocker had posted the following (sorry, I don't have the link, just saved the quote):
"From EC Counsel:
"At the Liquidation Trust, once all creditors have been paid off in full, all distributions to shareholders will be split 75/25, but all of those distributions will go to the shareholders, not to NewCo. "
This didn't seem right to me, so I spent some time going through the LT and POR documents to see if there is specific language on this question. What I found is... a confusing mess that made me unable to figure out the answer.
Here's a short summary of what I found and emailed to Rishi Jain at A&M:
(a) For class 19, there is no language indicating that a redistribution of LTIs to that class would be shared pari passu with another class.
(b) Class 19 appears alone in its own tranche in the Waterfall Recovery Matrix.
(c) For class 19, there is no "Limitation on Recovery" language.
To me, (a) and (b) suggest that class 19, should it receive redistributed LTIs, has waterfall priority over classes 21/22 and that it would not share such distribution pari passu with another class(es). On the other hand, (c) suggests that this is not the case as there is no threshold at which the recovery of class 19 would be considered fully satisfied and cause a redistribution to classes 21/22.
Here's the specific question I asked:
if there were to be LTIs distributed to holders of old WMI equity securities, would there be a distribution priority for LTIs arising from old preferred equity (class 19) over those arising from old common equity (class 22)?
Here's the reply I received back:
The simple answer is yes. Payment on the LTIs would follow the same priority structure as it did prior to the effective date and Class 19 would come ahead of Class 22.
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At that time:
Rishi Jain
Vice President Restructuring, Washington Mutual Inc.
Director Turnaround & Restructuring, Alvarez & Marsal
So if Class 19 is ahead of 22, does that not imply that APR is still intact and no 75/25 until the end?
I find it kind of interesting, that these matters became a red flag back in the days of April 2012..
