WMI Bondholders' Motion - In Infidus Veritas Summary: WMI Bondholders want to convert WMI's bankruptcy case from Ch. 11 (reorganization) to Ch. 7 (liquidation), because they want to be paid now, and the Equity Committee's efforts to oust WMI's Board of Directors (effectively, Alvarez & Marsal) will delay their recovery.
I have extracted relevant quotes, highlighting some frank admissions by a Committee "in the loop". In addition to royally P'ing me off for its smack talk about the EC, it confirms that the POR/DS is trash and the shareholders' vote is a real threat.
GLTA
4. ...Indeed, from the beginning, the WMI Noteholders have expressed concerns to the Court about the prospects and potential consequences of a synthetic debtor comprised of a virtual army of expensive, but unsupervised, professionals. No relief was sought, however, based on (a) the informal understanding that great deference would be shown to the views of the estates' legitimate stakeholders, (b) representations that the retained estate professionals were quickly gaining a working knowledge of the issues, and (c) the hope that these cases could be concluded in an efficient and expeditious fashion.
5. Unfortunately, 18 months later, it now appears that the WMI Noteholders' concerns have been largely realized and that our hopes have been dashed. Millions of dollars of stakeholder money has been spent and, unless a global resolution suddenly takes shape, little, if any, benefit has been achieved. Instead of an expeditious resolution, these cases are on the verge of unraveling and creditors are facing the prospect of ongoing protracted delays in obtaining recoveries:
- Exclusivity is about to terminate making the filing of multiple plans almost a certainty. - The FDIC is threatening to abandon the settlement it previously agreed on the record to support. - The Debtors are holding up further efforts toward progress by insisting that any ultimate deal include releases for insiders who are providing no value to the estate or its creditors. - And, the Equity Committee has sought to increase the delay and cost to the process by adding yet another layer of administration-an examiner to re-investigate estate claims against JPMC and the FDIC.
6. Making matters materially worse, the Equity Committee and its members are also engaged in litigation in this Court and in state court in Washington, to conduct a shareholder meeting for the express purpose of electing a new slate of directors; one that would undoubtedly serve as an instrumentality of out-of-the-money shareholders and which would make a mockery of the notion that the debtor in possession is to serve as a fiduciary for all legitimate stakeholder interests. Indeed, if successful, replacement of the board by the shareholders would likely result in the indefinite delay, and ultimate diminution, of legitimate creditor recoveries flowing from the newly constituted board's likely instruction to its lawyers and advisors to swing for the fences in litigation with JPMC and the FDIC.(XOM: YOU KNOW IT!)
22. Since that time, it has become clear, however, that the purported Global Settlement was not, in fact, a real deal because it had not been agreed to by all of the parties, including in particular the FDIC.
47. Nor does such a result make sense. Equity will receive no recoveries unless, after years of litigation, the Debtors completely prevail on all of their claims against the FDIC and JPMC. Under these circumstances, allowing equity to replace the debtor in possession will do nothing more than spur unnecessary litigation run for the benefit of equity, not creditors.
50. Simply put, it is fundamentally unfair for an out of the money constituency to control the Debtors' assets, especially where those assets consist mainly of cash that can be efficiently distributed by an independent trustee.
Motion of Washington Mutual, Inc. Noteholders Group for and Order Under 11 U.S.C. § 1112(b) Converting the Debtors' Cases to Chapter 7 or, in the Alternative, for an Order Under 11 U.S.C. § 1104(a) Appointing a Trustee to Administer the Debtors' Estates http://www.kccllc.net/documents/0812229/0812229100504000000000063.pdf
AI
