Mr Cooper Group Inc (COOP)

[NASCOW]

Interesting reading...Although in District of Columbia case, it sounds like it forms the basis of FDIC argument in BK court room

http://www.ghostofwamu.com/documents/09-00533/09-00533-0083.pdf

any thoughts?

12 U.S.C § 1821(d)(11)(A). If Plaintiffs are correct that the FDIC’s sale of WMB’s assets to JPMC violated the FDIC’s duty to maximize the value of the WMB receivership estate and that
violation gives rise to a cause of action, the claim should be against FDIC-Corporate (or the United States), not against FDIC-Receiver, and the damages should be paid to the WMB
receivership estate—not to WMI—for distribution in accordance with 12 U.S.C.§ 1821(d)(11)(A). Any recovery to WMI before payment to the Bank Bondholders and other legitimate creditors of WMB would be in contravention of the statutory priority scheme and Congress’ clear intent that shareholders of a failed bank be last in line to recover from a bank
receivership.
Count V should also be dismissed because, as explained by the FDIC, federal law—specifically 12 U.S.C. § 1821(d)(5)(D)(i), 12 U.S.C. § 1821(d)(5)(E), and 12 U.S.C. § 1821(j)—
bars Plaintiffs’ request for a declaration that the FDIC-Receiver’s disallowance is void. See FDIC Mem. at 22-23.
Finally, to the extent that it includes Plaintiffs’ claim against the WMB receivership estate for recovery of $6.5 billion of capital contributions from WMI to WMB as alleged
fraudulent transfers, Count I should likewise be dismissed. As explained by the FDIC, WMI does not allege that these contributions were made with actual intent to defraud, and WMI’s
Case 1:09-cv-00533-RMC Document 83 Filed 10/27/2009 Page 3 of 5
claim for “constructive fraudulent transfer” fails because (irrespective of whether they could)Plaintiffs have not alleged that WMB was insolvent on the date of any of the challenged capital contributions. See FDIC Mem. at 26. Accordingly, Plaintiffs’ allegations are insufficient to show that Plaintiffs did not receive reasonably equivalent value—a necessary element of fraudulent conveyance under 11 U.S.C. § 548(a)(1). In addition, even if it were the case that the
capital contributions otherwise satisfied the requirements for fraudulent conveyances, WMI’s loss from these contributions would arise from infusions of equity in WMB made by WMI as
WMB’s shareholder. Accordingly, allowing payment to WMI based on its fraudulent conveyance theory for these capital contributions, ahead of payment of the Bank Bondholders’
claims in their entirety, would also undermine the payment priority scheme outlined in 12 U.S.C. § 1821(d)(11)(A).
2. The Bank Bondholders join in the Oppositions filed by the FDIC-Receiver (Dkt. 52) and JPMorgan Chase Bank, N.A. (Dkt. 61) to Plaintiffs’ Motion to Dismiss the Amended Counterclaims of the FDIC and to Stay the Proceedings in their Entirety filed by Washington Mutual, Inc. (Dkt. No. 45), and oppose the Plaintiffs’ Motion to Dismiss for the reasons stated in
those Oppositions.