Washington Mutual WAHUQ Trust Prf (fka WAHUQ)

[marayatano]

Kala, "The Treatment of OID in Bankruptcy

In bankruptcy, the allowance of a creditor's claim is governed by section 502 of the Bankruptcy Code, which provides that the allowed amount of a claim should be determined as of the date the bankruptcy case is commenced. Consistent with this rule, claims for unmatured interest are disallowed. 11 U.S.C. Section 502(b)(2). The Bankruptcy Code does not define unmatured interest; however, courts have explained that interest is unmatured when it has not been earned as of the petition date. In re U.S. Lines, Inc., 199 B.R. 476, 481 (Bankr. S.D.N.Y. 1996). Accordingly, as a general rule, creditors are not entitled to interest that has not accrued as of the petition date. Prior to Solutia, this rule had been applied to unsecured debt issued at a discount.

When debt is issued at a discount, the issuer receives less than the face amount of the debt at issuance, but owes the face amount at maturity. The difference between the face amount and the money received is known as original issue discount (OID), which amortizes over the life of the debt. Because the amortization resembles interest accrual, courts have held that OID constitutes interest for purposes of treatment under the Bankruptcy Code.

As such, in 1992, the Second Circuit ruled in In re Chateaugay Corp., 961 F.2d 378 (2d Cir. 1992), that an unsecured creditor's claim for OID that remained unamortized as of the petition date must be disallowed as Òunmatured interestÓ pursuant to section 502(b)(2) of the Bankruptcy Code.

The legislative history of section 502(b)(2) of the Bankruptcy Code supports this holding, using unamortized OID to illustrate the section's operation: "a claim on a $1,000 note issued the day before bankruptcy would only be allowed to the extent of the cash actually advanced. If the original discount was 10 percent so that the cash advanced was only $900, then notwithstanding the face amount of [the] note, only $900 would be allowed." See H. Rep. No. 595, 95th Cong., 1st Sess. 352-53 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 5963, 6308-09. The legislative history adds that to the extent OID has amortized prior to the petition date, "the interest component of the note would have to be pro-rated" to disallow the unaccrued portion of interest.".

http://www.kirkland.com/sitecontent.cfm?contentID=223&itemId=2670


23,000,000 share float based on the below links:

http://www.sec.gov/Archives/edgar/data/1143930/000091205701531093/a2058482zs-3a.htm
http://www.sec.gov/Archives/edgar/data/933136/000091205701523774/a2053990zs-3a.htm


789,353,506.51 - 23,679,306.88 = 765,674,199.63 amount available for distribution for WAHUQ

765,674,199.63/23,000,000 = $33.29 per share for distribution (minus fees/expenses).

Maybe someone may want to contact Wells Fargo Trustee and find/confirm float.

Seems as though "The Treatment of OID in Bankruptcy" trumps any liquidation clause if the prospectus.

The above is my opinion.

Thanks.