You keep emphasizing that prefs will get cancelled. Yeah we get it. Of COURSE they will be cancelled. In the absence of litigation, everyone knows there are simply not enough assets to make pref's whole. They are looking at a fractional payout. Thus they WILL GET CANCELLED. DUH.
However, that does NOT mean they receive ZERO and get cancelled. The bet for people that are in these at a couple cents on the dollar is that they could receive 10 or maybe even 20 cents on the dollar. That would be a VERY SUCCESSFUL outcome even though it would culminate with cancellation.
Yes, there is post-petition interest. However, the balance sheet assets are almost certainly stated low. Maybe even significantly low. In particular, the INVESTMENT IN SUBSIDIARIES is NOT a market value. I haven't done the analysis, but you might have noticed that the equity markets have rallied hard in the past year. This value could be DOUBLE OR MORE the $1.4B on the balance sheet. It could also be LESS. Who knows?
Additionally, in order to make this go away, the pot could be sweetened (it would be painless to re-split the tax refund) in order to spare the FDIC and JPM embarrassment.
The importance of the judge and EC is now to see that the value of these assets are maximized, and that the unimpaired creditors do not just fire sale them to get their money fast. Additionally, the EC can threaten to litigate in order to try and get the pot sweetened. That's the game.
This has always been a cusp security whose value swing wildly based on the potential outcomes. It might be out of the money, it could be worth 20 cents. If you're in at 5 cents, that's not a horrible up/downside (at least if you haven't invested your kids college education).
AI
