The warrants are addressed here am I not correct?
Taken from the D/S filed 10/6/2010
b. Broadbill Declaratory Judgment Action.
On April 12, 2010, Broadbill Investment Corp. (“Broadbill”) commenced an adversary
proceeding against WMI related to the Anchor Litigation, discussed above. Broadbill’s complaint seeks
several declaratory judgments by the Bankruptcy Court, including a ruling that the holders of the LTWs
have allowed claims against—and not equity interests in—WMI. The Debtors believe the causes of
action in the complaint are wholly without merit and, on May 17, 2010, filed a motion to dismiss
Broadbill’s complaint on several grounds. First, the Debtors contend that Broadbill lacks standing to
bring any cause of action in connection with the LTWs. Second, the Debtors believe that Broadbill’s
claim for breach is unripe. Third, the Debtors believe that that the LTW holders do not have a right to
participate in any recovery from the Anchor Litigation. Finally, the Debtors believe that, pursuant to the
LTWs’ terms, the LTWs are plainly equity securities and thus constitute equity interests in, not claims
against, the Debtors.
On May 18, 2010, the Creditors’ Committee moved to intervene and filed a joinder to the
Debtors’ motion to dismiss. The Bankruptcy Court has not yet ruled on the Creditors’ Committee’s
motion to intervene. At a hearing before the Bankruptcy Court on June 3, 2010, two additional purported
LTW holders, Nantahala Capital Partners and Blackwell Partners (collectively, “Nantahala”), informed
the Bankruptcy Court and the Debtors of their intention to intervene in the adversary proceeding
commenced by Broadbill. On June 7, 2010, Broadbill filed its opposition to the Debtors’ motion to
dismiss, and, on June 8, 2010, Nantahala filed its own brief opposing the motion to dismiss. At a hearing
before the Bankruptcy Court on June 17, 2010, the Bankruptcy Court stated that it would enter an order
formally allowing Nantahala to intervene in Broadbill’s adversary proceeding and requested that the
parties submit a stipulation and proposed order to that effect. On June 25, 2010, Nantahala filed a
stipulation and proposed order that would allow them to intervene in Broadbill’s adversary proceeding.
The Bankruptcy Court approved the stipulation on June 30, 2010 and Nantahala filed an intervenor
complaint on July 1, 2010.
On June 16, 2010, the Debtors filed the 43rd and 44th Omnibus Objections in their
chapter 11 cases, seeking to disallow approximately 190 claims filed by putative LTW holders (including
Broadbill and Nantahala), on the bases that: (i) the claims are not actual claims, but rather equity interests,
US_ACTIVE:\43338029\60\79831.0003 57
and/or (ii) the claims must be subordinated pursuant to section 510(b) of the Bankruptcy Code. On June
24, 2010, the Debtors moved to stay the Broadbill adversary proceeding, to consolidate the Broadbill
adversary proceeding with the proceedings to resolve the Debtors’ 43rd and 44th Omnibus Objections,
and to adjourn the hearing on the 43rd and 44th Omnibus Objections to September 7, 2010. On July 15,
2010, Broadbill and Nantahala filed objections to this motion. At the hearing before the Bankruptcy
Court on July 20, 2010, the parties announced an agreement pursuant to which Broadbill would file a
consolidated class action complaint on behalf of the LTW holders, which would supersede all prior
complaints, and that the Debtors would withdraw without prejudice the aforementioned motion to dismiss
and motion to consolidate, and would adjourn the omnibus objection sine die.
On September 3, 2010, Broadbill and Nantahala filed the aforementioned consolidated
class complaint on behalf of the class of LTW holders, naming themselves as class plaintiffs. On
September 17, 2010, WMI filed an Answer as well as a Counterclaim based on section 510(b)
subordination. On September 24, 2010, WMI filed its First Amended Answer and Counterclaim.
If Broadbill prevails in the adversary proceeding on behalf of the class of LTW holders,
their claims against the Debtors will be treated as General Unsecured Claims pursuant to the Plan. Thus,
because the LTW holders’ claims are disputed claims, the Liquidating Trustee will reserve up to $194.1
million, the maximum amount payable in the event that LTW holders’ claims are allowed in full, or such
lesser amount
AI
