I received a Court filing in the mail answerable by July 6 2010. I have my own take on this case and would like some feedback as to its viability. I am very happy with the current representaion by Broadbill et al. I just think there may be another angle here.
In re Washington Mutual et al. Debtors Notice of Debtors’ Forty -Third Omnibus (substantive) Objection to Claims Chapter 11 Case No. 08-12229 Hearing Date July 20, 2010
The Debtors allege that under bankruptcy code, the LTWs - Dime Warrant Claims - (the Creditors) - are
securities in nature and are therefore null and void.
To prove their point, Attorneys Marcia Goldstein and Brian Rosen for Weil, Gotchal & Manges LLP and Attorneys M. Collins,C Jang and T. McRoberts for Richards, Layton & Finger, P.A. debtor Attorneys for WMB and WMI, assert that the Litigation Tracking Warrants (LTWs) are by law, and definition “equity securities”, which puts them at the end of the recovery line at Chapter 11 Bankruptcy. Period.
They than produce a longwinded definition of “Warrants” and “options” as well as conditional statements as “not exercisable unless and until” and “rights to purchase”, with sufficient negation citations to deny the validity of the LTWs claims to any recovery. ¶ 28 states emphatically “although the LTWs are, as a matter of law, equity interest...such claims would be subject to mandatory subordination pursuant to section 510(b) of the Bankruptcy Code...”
Here we have it ... black and white proof of worthlessness.
But, wait!
Why were the LITIGATION TRACKING “warrants” so worthless in the event of WMB Bankruptcy? What does the demise of WMB have to do with the LTWs? Why are the LTWs standing in line at Bankruptcy Court?
Simple, because they were deliberately mis-classified and mis-represented by Debtors! By classifying the LTWs as creditors and denying their legitimacy both the bank and the FDIC are off the hook.
The unfortunate use of the term “warrant” is misconstrued above to evince the conventional conclusion. But, this is not a “security” by any stretch of the imagination. If we consider the entire term "Litigation Tracking Warrants", we can see that this is not meant in the traditional financial definition of warrants, as it conveys no value by its exercise. Here the term must mean to “endow with the rights to - until resolved” . This instrument is uniquely designed to empower its holder to Track and receive proceeds from the Litigation - or fail to do so - should this Litigation fail. Other definitions can’t be ascribed here as there is no other benefit to owning this instrument. The common usage of the term “warrant” is inapplicable as here it promises nothing more. And since it confers no present or future rights to :
A) Vote for BOD.
B) Share in the fortunes of the Bank.
C) Receive interest or dividends.
D) Convert to stock or bonds - except as dictated by the FDIC.
It cannot be properly classed a warrant in the conventional sense.
What we own, is the rights to any recoveries which the Anchor Litigation yield. That same “ Litigation” is the Trial that is working its way thru the United States Court of Federal Claims. Yes! THAT TRIAL! Not the Bankruptcy Court in Delaware. “LITIGATION TRACKING WARRANTS” are simply a method adopted at the beginning of the Trial to guarantee each shareholder a portion of the proceeds from that Trial. The LTWs were specifically detached from the Dime Bancorp securities to identify specific claim, unrelated to all other bank issues at the time of issue, or since.
The LTWs should NEVER HAVE BEEN listed as WMB WMI creditors. We are not creditors to the Bank. We are claimants waiting to get the proceeds from a long and convoluted legerdemain engineered by the FDIC to deny our rightful claim against them, not the bank.
The Washington Mutual Bank OR ITS SUCCESSOR, are merely the conduit entity thru which we are to be awarded the proceeds when we win. The FDIC has declared that, should it lose this case, it would rather pay the bank the cash and the bank would then distribute the proceeds in the form of its shares. The LTWs holders had no say in this matter. It was the result of the dictate of the FDIC.
WMB was the designated coordinator to lead in the Anchor Litigation case. For this activity it was to be reimbursed a percentage of the proceeds.
Now, this clearly sets the bank as AN AGENCY for the interest of LTWs. It is vested with the Fiduciary duty to represent “our” interest in the claim. In no way can the LTWs relationship be described as “security holders” in WMB. This relationship is no different than when the bank acts as a collection agent for Fanny Mea and other mortgagors. This agency is NOT SUBJECT TO THE RULES OF BANKRUPTCY.
Which brings me to the point - we should never have been lumped together with the creditors as we are not creditors to the bank we are likely creditors to the FDIC. The Bank has to proceed to finalize the Anchor Litigation as a Fiduciary and to disburse the proceed according to term of the LTWs. A motion to change our status from creditors to that of an agency arrangement should be made to the Bankruptcy Court at once.
P.S. I am NOT A LAWYER and don’t purport to be one. I am just a frustrated original issue LTW owner who is disgusted by the proceedings at hand.
PPS: Someone, please check to see if LTWs were registered with the SEC as securities. Lack of such is pivotal to the case.
AI
