Settlement will be announced on October 7th
Afternoon Ladies & Gents. The following is merely my opinion. Every word. But I'd be DELIGHTED with anyone who could refute it for me:
1. At this point in time, Walrath, the trustee, and all the lawyers involved in the case know that Weil and the Debtor are hiding assets, and thus attempting to perpetrate bankruptcy fraud. And more incredibly, Weil and the Debtor now definitively know that everyone believes this to be true. Yet, they are sticking to their position in the counter-belief that (a) they can successfully pull it off, by virtue of refusing to disclose and produce documents that would tend to prove such a fraud or (b) that JPM and/or FDIC will step in with money and make this all just go away.
2. Despite repeated attempts to have its DS heard and approved, Walrath has steadfastly refrained from providing Weil with the opportunity to do so, and has now fixed-it-in-stone, permitting no further revisions to it. It now exists as a document created prior to the disclosure(s) contained in the sealed document that was presented to the court earlier this month, and the appointment of an examiner, and whatever revelations the examiner provides to the court on September 7th. Clearly, Walrath is wholly uninterested in its content anymore as new disclosures have overtaken it and rendered it dated and meaningless. Indeed, she communicated this mindset to all back in May when uttered the words “smoking gun” and “why the hurry?”. In this context, it will not be approved on September 7th (nor October 7th for that matter) unless (a) the examiner’s interim report and final report totally fails to support Walrath’s rapidly growing suspicions, and (b) Weil can somehow overcome the 1,060 or so filed objections to it. Nothing produced by Weil thus far even remotely suggests that it will be able to do either of these tasks.
3. If, however … just if, Weil somehow manages to prevail on either September 7th, or October 7th, then the door is opened to competing valuations of the debtor’s estate as we move to the scheduled November 11th confirmation hearing, and our then fading hopes will hang on the slender thread of whatever Solomon has managed to uncover (that the examiner could not).
4. If Weil fails on September 7th, (the more likely scenario) then the case remains in limbo pending a month of further investigations by the examiner, leading to the DECISIVE October 7th hearing.
5. The parties that put this scheme together envisioned that its successful conclusion would take place well within the first quarter of 2010 when exclusivity expired. They envisioned having absolute control of the matter’s movement and direction, both of which were critical factors to the scheme’s ultimate success. They would have been spot-on correct in their assessment had it not been for a vigilant trustee, the EC’s appointment and its excellent legal counsel, and now the examiner’s appointment. WEIL SIMPLY CANNOT AFFORD TO FAIL at the October 7th hearing, as the November 11th confirmation-date-window will slam shut, and the case will be dragged into the ether of 2011, and the continued probing of the examiner. Weil will have decisively lost control of the matter’s forward movement, AND become even more vulnerable to the filing of a competing POR by equity; one that will no doubt have the undivided (and perhaps even favorable) attention of Walrath, after having digested the examiner’s October 7th report; AND the continued probing of the examiner (if she warrants it necessary). In this respect it’s somewhat ironic that Weil is now (and will be on October 7th) foiled by the scheme contained in his POR that cannot now (or then) be amended. He’s in a locked car with a decomposing body!
MY CONCLUSION: Weil will not prevail at the September 7th hearing (and he knows it), thus setting the stage for the CRUCIAL October 7th hearing. For all the reasons I’ve stated above, it’s ‘do-or-die’ at that point. So much so, that settlement negotiations will begin in earnest shortly after the conclusion of the September 7th hearing (which will be preceded by an in-chambers meeting of all parties, where the judge will ominously inform Weil of what is at risk) and will be successfully concluded by month’s end and communicated to the judge, who, on October 7th, will permit Weil time to file an amended DS/POR that will comport with the terms of the settlement reached. The hearing on the amended DS will take place in late October and the confirmation hearing will take place in late November. Preferred’s will get face but no dividends. Common will get $6.00 per share (twice its value subsequent to the TPG dilution). Walrath (alone) will consider the fairness of it all … and breathing a sign of relief, approve it..
In order for such a payout to take place, the estate’s value will have to be seen as being in the neighborhood of $32.8 (i.e., senior debt $8.5B, all preferreds $7.5B, common $16.8B), of which $29.8 is undisputed for all practical purposes, and will have no negative effect on JPM or FDIC. They’ll simply be giving back that which never belonged to them. The difference (i.e., $3.0B) will come from JPM as “delayed payment” for the subs and the termination of all legal claims against it. Find more subs and that amount will rise to a maximum of $4.0B, which is the amount now contained in JPM’s litigation reserve. Should that prove to be the case, then preferreds will additionally get some portion of their accrued dividends.
The case ends. JPM hasn’t copped a sweat. Weil has dodged a bullet. FDIC’s still cool and confident. Common can live with it all. And the good and honorable Judge Mary Walrath becomes a legal legend.
GOOD LUCK TO US ALL!
AI
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