No what I said was ... "I want this board to start thinking 'outside of the box.'" When I say Ordinary Loss in the course of business, I mean a full business loss that can be carried forward if necessary.
WMI1 owned WMB, WMB was worth approx 26B in assets to WMI1. Per the ruling the IRS made in late 2008, the loss of a BANK can be written as an Ordinary Loss, not a "capital one." Now, we move forward, we have seen tolling agreements moving back and forth for two years. We do not know what they are extending, buit one thing is ofr sure, the the debtors wanting to abandon the stock of WMB and put the ordinary loss on the books was left off the table after the first opinion.
In her first POR opinion THJMW wrote the following...
In addition, under the
Plan, WMMRC, an insurance company subsidiary of WMI that is
currently in run-off (the “Reorganized Debtor”), is expected to
provide additional value to stakeholders from cash flow and the
possible use of net operating loss carry-forwards (the “NOLs”).
Followed up by..
With the release under the Global Settlement of substantial
claims filed by JPMC and the FDIC (which the Debtors contend are
approximately $27 billion each), the Plan Supporters believe that
the Plan should result in payment in cash in full (plus postpetition
interest) of all creditors’ claims except the lowest
class of creditors, which are expected to receive approximately
74% of their claims plus the right to participate in an offering
of stock in the Reorganized Debtor. (Ex. D-5C.)
The total payout under the Plan is expected
to exceed $7.5 billion. (Ex. D-5C at 3.) In addition further
recoveries may be possible from the assets conveyed to the
Liquidating Trust and from the Reorganized Debtor and the NOLs.
Finally, because the Debtors will not
emerge from bankruptcy before December 31, 2010, the Debtors
could potentially have the full use of their approximately $5
billion in NOLs. See Chaim J. Fortgang & Thomas M. Mayer, 47
100
Valuation in Bankruptcy, 32 UCLA L. Rev. 1061, 1129-30 (1985)
(noting that NOLs often are a debtor’s largest asset).
Therefore, the Court cannot accept, as the Plan Supporters
contend, that the rights offering is of no value.
in this first opinion this court agreed with the debtors that equity interests had no value, but it did not accept the plan because it unfairly singled out (some) PIERS holders who would not be allowed to acquire reorganized stock with their claim. She did not like that!
"Therefore, the Court cannot accept, as the Plan Supporters
contend, that the rights offering is of no value. Mr. Thoma is
correct. The Plan must be modified to allow all PIERS Claimants
the opportunity to participate in the rights offering." See,
e.g., Combustion Eng’g, 391 F.3d at 241, 248 (vacating
confirmation order based on apparent disparate treatment of
creditors within a class).
It was the debtors and creditors greed, avarice and downright disdain for equity that ticked this judge off and made her realize that there is value here (for equity), it is just not "currently" in monetary form.
Now that equity has survived and we now have control of the company, we have to go look "outside of the box" and figure out what the value will be going forward. We have 75M in cash and 125M in a loan "if we want it." I would not take this loan under the current terms if I was the CEO, I would negotiate a favorable rate without subjecting my balance sheet to such large "ionterest" debt. I would only use what "if any" (line of credit) was badly neeeded and I could see the future benefit to my shareholders.
Now.. I said "outside of the box." We know what is in the box! I want you guys to look outside and see if you see anything hidden in the snow?
OK. I will get to it.. If I am the CEO of WMI2. I have plenty of shareholders looking at me to make their investment work. Many want to jump ship and many need me to succeed, so we can show those big bad Wall Street lawyers and accountants that we can do it. We have so many issues to look at, but there is something hidden in the snow that will make it all better.
1. I'm CEO..On "day one" I abandon my companies investment in WMB stock, along with the claims associated with WMB. This helps WMI2 to realize an instant 26 Billion loss for my shareholders. I know I have a unrestricted 6B NOL that has to be protected if it is to be used? HUM. Is it needed? When I now have just put a 26B Ordinary Loss on the books, that has a current value of 35% of 26B = 9.1 Billion
Oh! the IRS says I can not sell or merge with another company for NOL's to be used by the acquiring company... But guess what? I don't care about the 6B in NOL's anymore, because I just put a 26B Ordinary Loss on the books and sell my Ordinary Loss!!!! I can now merge "with any" company that wants to acquire me for my OL because the law does not single out this type of acquisition. We are not using the NOL's, we are using the loss we took for WMB Bank Stock as an instrument of value.
Or, here is another scenario..
I allow WMI2 to get acquired by another company "any company" does not have to be in the banking business and with that acquisition I bring my valuable "Ordinary Loss" 26 Billion (which I have not abandoned yet) with us into the new company.
Now that I have shown you guys what is hidden in the snow, I would like comment on this, Because it really is outside my expertise. Accountants and CPA's need to speak up. The Ordinary Loss as approved by the IRS in 2008 was touted as costing taxpayers 140B, because an ordinary loss is not an NOL, unless it is carried forward, even then, it is not an NOL that is subject to the TARP rules..But, will we carry forward that 26 Billion? FAT CHANCE !!
See where I am going with this? This could be the value the EC uncovered in the snow. The future holds the key, all the EC needed was the company. If you look at the billings, every time the WMB stock loss was brought up, it was immediately knocked right back into silence. The Hoffman filing on abandoning the stock was on target of what the future could bring to WMI2 shareholders. This rulin by the IRS may have put a 9B value on WMI2.. THJMW must have realized this, because everytime the debtors brought it up, she squashed them on it and agreed that it something she will allow after confirmation.
Answer if you know anything about this subject please.
~Don~
AI
