Here is Bopfan's post about the Examiner Report;
First and foremost the examiner’s report is an examination of WMI’s plan. The heart of the plan is release of WMI’s claims against JPM and the FDIC because WMI’s counsel, the nation’s premier Chapter 11 group, argues that the claims against the two defendants either (1) cannot be successfully litigated or (2) successful litigation would not be economically practical (i.e., the litigation expenses would be greater than a recovery) and therefore cannot be used to fund a plan. Hochberg’s team will put both of these claims in the dock.
Hochberg’s report will measure the legal arguments WMI has brought against JPM and the FDIC, respectively, in the D.C. action and the Bankruptcy Court litigation, and give an opinion about whether the court should take Weil’s word about either (1) or (2). What (1) means is that WMI does not have viable claims against either JPM or the FDIC. By ‘viable’ I mean that the claims can be dismissed on their face or WMI cannot present the applicable court with facts that would prove its claim. For example, if the claims in WMI’s federal lawsuit were dismissible on their face the FDIC would have filed a summary judgment motion to dismiss one or all of them, and one or more of the claims would have been dismissed. (The kinds of ‘automatic dismissal’ rulings are for claims where a statute of limitations has run or the plaintiff has sued the wrong party.) If (2) were applicable it would be because (a) the defendant lacked the resources to pay the judgment if awarded or (b) the amount of $ to be recovered under the claims is so limited that once WMI paid its legal and professional expenses there’d be no money left for WMI (i.e., the Dickens Jarndyce case mentioned in Bleak House).
Argument (2), whether on prong (a) or (b), is meritless. Both the FDIC and JPM have very deep (even unlimited) pockets, and even if WMI spent upwards of $10 million per month, or $120 million per year for a decade a recovery of the $4 billion alone would justified. If you consider the $20 billion WMI had on deposit with WMBfsb, the tax refunds, and other assets you see why Weil provided no details.
The foregoing should make it obvious that Weil’s assertion that the defendants should receive waivers (and, moreover, that JPM should get a share of the tax refunds) is insupportable. In my opinion no law firm of any quality (including a sole practioner with average legal ability) whether or not it regularly provides Chapter 11 advice could recommend waiver of WMI’s legal claims as Weil has done.
Accordingly, the court will accept the examiner’s findings after all interested parties have had a chance to file oppositions or support. As the court’s acceptance of the findings on these points discredit an indispensible part of WMI’s plan the plan will not be confirmed and the court will permit competing plans to be filed.
In addition to the death of WMI’s plan, the question of how Weil could submit such a plan will be discussed in the examiner’s report. The examiner will say something to the fact that there was no rational basis for such a plan, and that Weil knew or should have known the plan was harmful to the estate, to the equity classes. The examiner will further say that Weil’s and WMI’s had duties to shareholders and that those duties had been breached.
There will be useless denials from Weil and shortly thereafter the court will entertain a motion to appoint a Chapter 11 trustee, which will be granted.
