Mr Cooper Group Inc (COOP)

[WithCatz]

'Shall' vs. 'Should' - A few words from El Juez regarding the Disclosure Statement

El Juez writes: {A sitting judge} - (posted with his permission from the GB)
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I feel a little like Alice in Wonderland.  ("Sentence first, then the trial!" said the Queen.)  My 35 years experience in criminal law leaves me scratching my head at the "alternate universe" that is bankruptcy law.  However, I'm feeling kind of like Mordacai and Catz:  Enough of the preliminaries, let's not get hung up on the particulars of the DS.  Instead, let's get on with the main attraction already!.  The DS is, after all, only a statement of the debtor's "disclosure" of what it (and it alone) thinks are the relevant facts that stakeholders should know before voting.  That's the way this system works.  

I have a feeling Judge Walrath is seeing and feeling the same thing:  We could spend the rest of our natural lives crossing T's and dotting I's in the DS and tweaking all the voting procedures, but what really counts is the confirmation hearing, just like last time.  That's when the parties actually get to air their positions with real witnesses and evidence, like PJS.  In the mean time, the EC might just hit a home run with discovery on the hedgies, and our brilliant pro se shareholders might come up with another game changer.  As for me, I'm standing pat.

Also, after discussing these issues on the phone with Myadad1 tonight (who thought I should point out the following to the Board), I should also observe that I noticed while listening to the end of the DS hearing and reading the transcripts afterwards (if this OFC member recalls correctly * ;D), that Judge Walrath repeatedly said that the debtor "should" change the DS in certain ways to reflect her findings, e.g regarding alternate valuations of the NOLS under various scenarios, etc.  However, as I recall it, she never did actually "order" the debtor to do so, nor did she ever say that the debtor "shall" do so.  It struck me as odd at the time, because for lawyers and judges these are important and significantly different words, with greatly different meanings.  "Should" is a word signifying the giving of a suggestion, advice or direction, but it is not the same as the mandatory "shall" or "I order that you . . ."  Therefore, at the time I took this language as indicating that the judge was giving Rosen advice about what he ethically "should" do in the best of all possible worlds, in the interests of "full disclosure", but that she was not "ordering" him to do it.  I can only conclude from the fact that Rosen did not follow her suggestions (and that she so quickly approved the DS anyhow) that, because of the way the BK system actually works, it is ultimately up to the proponent of the DS, not the judge, to make final decisions as to how it's worded, and that, under the applicable rules, the judge must accept it and move it along as long as it satisfies the minimal levels of disclosure required by law.

For perspective, once again I'll analogize this situation to cases in my world:  By law, it is the D.A. (not the judge) who files the criminal charges to submit to the jury at the trial.  During settlement negotiations and pre-trial proceedings the judge might try to twist the D.A.'s arm by observing that other, different charges might be easier to prove at trial, or that the D.A. has little chance of proving a particular count beyond a reasonable doubt.  But if the D.A. is stubborn (or has a tactical goal in sight), he or she has the complete discretion to reject what the judge thinks he/she "should" do and proceed to trial on the particular charges/legal theories he/she wants to pursue.  (This happens all the time.)  It appears that the BK system operates in a similar fashion, so Rosen's decision to decline to follow the judge's "shoulds" isn't necessarily illegal or disrespectful, although it may be bad strategy when Judge W is herself the ultimate trier-of-fact.  But that is why I think Judge W signed off on the DS today, anyhow.


Catz: * OFC = Old Fogies Club -- an inside-ish joke at GB