Oddly enough, the best outcome for DIME, Class 12 status, is accounted for in the current plan construct, and therefore is not an impediment or a possible impediment to confirmation.
Oddly enough, even though you are most certainly correct in that funds are to be escrowed in the event that Dime Ltw's are in fact Class 12 (and not Class 18, 21 or any other Class under the new and improved POR 7), there could be a little chink in this armor regarding Mediation as putting DIMEQ behind the proverbial 8-Ball.
Check out the provisions relating to the NOL's as contemplated under the Plan (see Disclosure Statement ("DS"), §VIII passim), limitations on accumulation of stock, "old and cold," etc., and you will notice that if Dime Ltw's were found to be Class 21, this could upset the apple cart and A LOT of unrestricted NOL's go buh-bye!
I could be very worng about this, as I gave POR 7 only a cursory reading (as it applied to DIMEQ), after reading your post, but the provision(s) of the Disclosure Statement ("DS") to POR 7, as they relate to DIMEQ and §382 of the Internal Revenue Code ("IRC"). (see §VIII(A)(2)(a)(ii), pp. 212-213 of the DS and pp. 224-225 on the pdf), kinda caught my attention.
If Dime isn't settled prior to the Effective Date, and if Dime Ltw's are found to be Class 21, and therefore entitled to receive many more shares than contemplated by the Plan as currently written, the the $5.4 Billion Dollars of unrestricted NOL's may vanish, go up in smoke, and then Newco is stuck with a $6 million dollar annual cap on the amount of NOL's it may use to offset income tax.
It would seem to me that THIS ALONE, should be incentive enough to pay Steinberg all $337 million (as "walk-away" money), so that he can leave them alone and quit kicking their asse.s senseless on an almost daily basis, but who am I to question Rosen?
So, while on an initial reading it would seem that Mediation would not be favorable to Dime, given the Escrowed Account, the bigger problem that some may not have considered is that if DIMEQ were to receive a large number of common shares in Newco after the Effective Date, unrestricted NOL's (to the tune of $5.4 billion dollars) go "poof," and then you have the government extremely happy to tax Newco on its first $5.4 billion or so in profits, as they otherwise only be able to claim $6 million dollars of write-offs per year, capped at 20 years.
Yikes!
At a tax rate of 35%, you're talking around $1.89 billion dollars. Ironically, right about the same amount that JPMC paid Judas to rob this bank. Do the attorneys (Rosen AND the EC not see the danger in screwing with Steinberg)? A $337 million payout beats a loss of $5.4 billion dollars in unrestricted NOL's any day of the week.
Disclaimer:
These are my thoughts, given a very cursory reading of the DS to POR 7.
I am NOT a bankruptcy attorney, and there are others here that have much greater knowledge/experience regarding the bankruptcy laws, tax laws, and specifically, restrictions to otherwise unrestricted NOL's, pursuant to §382 of the IRC, so I would respectfully defer to them. And yes, I am also NOT a tax lawyer, and my interpretation and reading of the DS should not be construed as tax and/or legal advice.
I could be way off on this. Please let me know if I am.
YMMV
Edit: I forgot to mention that if Steinberg wins, the Debtors are on the hook to the Plaintiffs for Legal Fees for undertaking to represent the entire class of Dime Ltw holders as a class action. IIRC, this was per Strochak's suggestion, as a way to avoid having the U.S. Trustee create an Official Committee for the Ltw's.
Ps: in my most humble opinion, I would venture that the Debtors would be well-served to negotiate in good-faith, unlike the last go around, where Art was open to mediation and Rosen was adamently opposed to it. And where, not so surprisingly, talks ended in May of this year after the Mediator said that no resolution was possible at that time.
And I'm not talking 10% haircut or even a 5% haircut. Check out IRC §382 and see just how bad it would be for DIMEQ to receive stock AFTER the Effective Date.
AI
