I have a question, or rather a statement, that I believe this entire board will agree on.....and that is...a Litigation Tracking Warrant, the security in itself, is not common stock. To think that a LTW, the security, is common stock, would be the equivalent of saying there are two trading classes of wamu common stock, such as a class A common stock (wamuq) and a class B common stock (dimeq). Agreed? Seems easy enough to understand that DIMEQ is not common stock in its current form.
So now, let's look at the plain language of 510(b):
(b) For the purpose of distribution under this title, a claim arising from rescission of a purchase or sale of a security of the debtor or of an affiliate of the debtor, for damages arising from the purchase or sale of such a security, or for reimbursement or contribution allowed under section 502 on account of such a claim, shall be subordinated to all claims or interests that are senior to or equal the claim or interest represented by such security, except that if such security is common stock, such claim has the same priority as common stock.
The debtors are relying on 510(b) to place DIMEQ in class 21 and give them pari passu treatment with WAMUQ. I submit to anyone that this is patently wrong. Pari passu treatment with wamuq, would, from the plain language of 510(b) be predicated on DIMEQ being common stock. It is not.
It can be argued that the 'vehicle' by which the DIMEQ holders may be compensated can be common stock, but that is a totally separate issue. Therefore, given the LTW's, the security itself, is not common stock in its present form, the only plausible conclusion is that pari passu treatment with common stock is not consistent with the plain language in 510(b).
Furthermore, the plan construct doesn't even acknowledge anything otherwise, as it deems the LTW's as common stock, such as an imaginary class B common stock, because it doesn't provide for a conversion calculation to even get it to the point of representing common stock. The assumption is that it already is, and nothing needs to be done.
For lack of better terms, the debtors are ignorant. I'd assert that DIMEQ is, at a minimum, ahead of priority than common stock, because as a practical matter, it isn't common stock, and is conflicted with the debtors analysis of the plain reading of 510(b).
IF subordination applies, I don't see any way other than Class 18.
Given the posture of the case at it's present point, if there is no settlement, my guess is Class 18 @ 60%, Class 12 @ 40%, and Class 21 if she flat misses it.
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