Dime Bancorp Inc (fka DIMEQ)

[hurtrhino]

PRESSURE BUILDS ON THE DEBTOR
I encourage everyone to read the entire Opinion issued yesterday by THJMW (linked below) with respect to the $49 million Tranquility Claim that was a Disputed Claim now allowed to proceed forward within the WMI bankruptcy. The passages below relate to the Court’s current view, stated therein, on 510(b) subordination and “equitable concerns.” And, this Opinion may contain some other items that may be of use to the LTW Plaintiffs:

“Even if the language in 510(b) was ambiguous, equitable concerns weigh against subordinating Tranquility’s claim. Tranquility did not purchase a security of the Debtors and did not assume the risk (and potential rewards) that a shareholder of the Debtors assumed.

The theory behind the Slain and Kripke article, and section
510(b), is that it would be inequitable to elevate a shareholder’s interest to the level of a creditor. This applies when the shareholder buys stock from an issuer but not when it buys stock from a third party. The example cited by the Debtors in oral argument illustrates this. If Tranquility bought stock of WMI from WMI, it would be assuming the risks normally associated with that stock, including the risk that WMI could become insolvent. . .”

http://www.kccllc.net/documents/0812229/0812229111220000000000005.pdf [Docket #9224]

Now compare the language from the Opinion in the first quoted paragraph above to the passage below which comes from the S-3a issued on 12/15/2000 by Dime Bancorp when the Dime LTWs were first created:

“An investment in the LTWs involves different risks and considerations from an investment in the common stock of a savings and loan holding company such as Dime Bancorp.”

Also, I will admit that this Opinion did involve a lot of arcane securities law but it is easy from my perspective to see some other correlations with our overall case. And, I was actually somewhat surprised that THJMW ruled against the Debtor on this particular matter which shows her sense of fairness.

Putting DIMEQ in Tranquility's shoes, how had we assumed the day to day risk of owning WMI stock, when the LTWs themselves said that it could be adjusted to pay out the value in other property, including cash (or even Apple stock, as this Opinion references)? The answer is that we had not. If THJMW maintains her judicial and intellectual integrity, how could she possibly subordinate the LTW's under §510 (and doom us to Class 18 status) when there was no purchase of securities from the Debtor? Furthermore, wherein there was nothing in the DIMEQ security that had any indication that an owner of LTW was taking on a equity risk in the day-to-day operations of WMI, especially when the Dime Letter to shareholders told those receiving LTW's what DIMEQ were, and just as importantly, what they WERE NOT. How can this opinion NOT help us, in that THJMW is dealing with Weil using the very same §510 chicanery in Tranquility as it is trying to do with DIMEQ. The Class 18 subordination arguments from the Debtor seem weak.

And I like the fact that THJMW is signing off on this Opinion YESTERDAY, when you have to know that she will be writing (or has written) the DIMEQ Opinion.

I think that Tranquility is good for us as it gives our counsel even more leverage during Mediation than I already believe them to have. Pressure builds on the Debtor.