Correct me if I am wrong-Starke's article is actually positive for equity!
When reading Starke’s article about DIMEQ and to me it appears he has a twist saying that DIMEQ will be paid from post-petition interest of the senior notes which should boost the price of WMI equities since this is/has been a very dark cloud over preferred and common shares.
WaMu Mediation Expanded to Included DIMEQ Securities
The mediator for Washington Mutual Inc. was given another assignment last week. The bankruptcy judge on Dec. 15 signed an order including representatives of the so-called litigation warrants into the mediation.
WaMu's revised plan sets aside $337 million to cover the securities, known as DIMEQs in view of the ticker symbol. A trial has been held in the bankruptcy court where the judge could rule any day on how the DIMEQs should be treated under the plan.
Should the security holders win, the result would be "a very bad outcome for the lower tiers of debt claims in the WaMu structure," Kevin Starke from CRT Capital Group LLC said in a report. Stark said a victory by the security holders "has the potential to shave some recovery on post-petition interest even off the senior notes."
Although a settlement with the DIMEQs isn't necessary for plan confirmation, resolution of the dispute would resolve a major open item affecting distributions to other creditor classes. The bankruptcy judge directed the parties to submit position papers to the mediator today.
WaMu filed a seventh's amended plan last week incorporating a global settlement designed so the bankruptcy judge won't be forced to preside over another contested confirmation hearing. For details on the settlement, click here for the Dec. 13 Bloomberg bankruptcy report.
The bankruptcy judge brought in a mediator after writing a 139-page opinion in September finding defects and refusing to confirm WaMu's plan for a second time this year
For details on Walrath's opinion rejecting WaMu's plan, click here for the Sept. 14 Bloomberg bankruptcy report. For details on Walrath's opinion earlier this year rejecting the prior version of the plan, click here for the Jan. 10 Bloomberg bankruptcy report. For details on the plan as revised after the January ruling, click here for the Feb. 14 Bloomberg bankruptcy report. For details on later changes, click here for the March 21 Bloomberg bankruptcy report.
The WaMu holding company filed under Chapter 11 in September 2008, one day after the bank subsidiary was taken over. The bank, once the sixth-largest depository and credit- card issuer in the U.S., was the largest to fail in the country's history.
The holding company filed formal lists of assets and debt showing property with a total value of $4.49 billion against liabilities of $7.83 billion.
The holding company Chapter 11 case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
