This morning I mailed USPS EXPRESS the Following to THMFW Court.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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In re: : re: Docket # 9389
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WASHINGTON MUTUAL, INC., et al., : Chapter 11
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vs. Owners of: : Case No. 09-12229 (MFW)
: DIME LITIGATION TRACKING WARRANTS:
: Adv. Pro. No. 10-50911 (MFW)
J. PHILIP MAX et al – Plaintive :
Claimant-pro se : Affidavit In Opposition
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REQUEST FOR AN ESTOPPEL OF THE SEVENTH PLAN OF REORGANIZATION (AS AMENDED) AND REMOVAL OF THE DIME LITIGATION TRACKING WARRANTS FROM THIS BANKRUPTCY PROCEEDINGS AS RIGHTFULLY BELONGING TO WASHINTON MUTUAL BANK OWNED BY JPMORGAN CHASE BANK, and NOT WASHINGTON MUTUAL INC.
The Honorable Judge Mary F. Walrath, Presiding
WHEREAS: I am an Owner of DIME LTIGATION TRACKING WARRANTS (LTWs).
WHEREAS: On behalf of myself and on behalf of all Class members of the LTWs, I hereby request a halt to the Final Order executing the Plan of Reorganization and to the granting of the removal of the LTWs as a Class from the SEVENTH PLAN OF REORGANIZATION as AMENDED (A7POR), and to remand the LTWs Litigation to the United States Court of Federal Claims as the only proper venue to conduct the outcome of their Claim.
Background
IN 1995 The Anchor Savings Bank (Anchor) was forced into receivership due to a controversial set of rules promulgated by the FDIC, which promised the bank a favorable treatment of Goodwill as Capital funds in FDIC assisted takeover of failed banking institutions. Subsequent to the takeover by Anchor of these institutions, the FDIC changed its rules, and, the result was that, under the new rules, Anchor was found to be in violation of its Capital ratio requirement and was forced to combine with the DIME Savings Bank (DIME). Anchor sued the FDIC for malfeasance and breach of Contract in the United States Court of Federal Claims (Litigation) (Case No. 95-39C) in order to recover its losses.
In the year 2000, DIME, the successor to Anchor’s Litigation, spun-off the RIGHTS TO THE PROCEEDS from this Litigation to its Stockholders. This claim-chit was named “Litigation Tracking Warrant - Expiration Date 2059” (LTWs), and described a “right to receive 85% of the value of the net proceeds”, if any, from the Anchor Litigation. The expiration date of “2059” was to signify the perpetual nature of these securities until the ultimate disposition of Anchor Litigation. By issuing the LTWs, DIME permanently removed this “potential future recovery” from its books and surrendered all rights to future recoveries from this suit to the owners of the LTWs. Owners of the LTWs have a NON-EXPIRING right to 85% of net proceeds from the Anchor Litigation. These “warrants” are not to be confused with securities designated by similar name commonly issued for conversions to stock. The LTWs “warrant” possessed none of the characteristics of such vehicles and represent unique, stand alone, claim-vouchers as defined in the Warrant Agreement, issued by DIME.
In return for 15% of the net proceeds of such an Award, DIME undertook the full responsibility for prosecuting this claim as its obligation to direct the Litigation thru the Court system.
In 2001, DIME combined with The WASHINGTON MUTUAL BANK. Washington Mutual Bank assumed the litigation obligation as a matter of Law. Noteworthy, the LTWs were not transferred, as these were a property that could NO LONGER be transferred by the bank, having been spun-off in the form of an LTWs that were owned by the DIME distributees, and their successors, issued in the original distribution date in 2000.
On September 26, 2008 The FDIC effected the sale of Washington Mutual Bank to JP MORGAN CHASE BANK for a sum of $1.98 Billion. The FDIC maintains that it transferred the Anchor Litigation obligation to JPMORGAN CHASE BANK. Furthermore, the FDIC established a position that any and all sums awarded by the Federal Court in the Anchor Litigation would accrue to the benefit of JPMORGAN CHASE BANK in its entirety, without any liability to the LTWs whatsoever. This theory has yet to be tested in the Federal Court.
In sum, with the sale of Washington Mutual Bank, the Anchor Litigation became snuggly ensconced in the belly of the JPMORGAN CHASE BANK. The successor in interest was awkwardly put in position of assuming the OBLIGATION of proceeding in the Anchor Litigation against the FDIC. It is awkward because JPMORGAN CHASE BANK is the beneficiary of the largess of the FDIC, and it is difficult to see these two amicable partners feuding in Federal Court, when, their relationship is so intertwined.
Two days after the takeover, Washington Mutual, Inc. (WMI), the holding company for Washington Mutual Bank, filed for Bankruptcy in this Court. At the time of such filing WMI no longer possessed the Anchor Litigation obligation as the Litigation was in the hands of JPMORGAN CHASE BANK.
This development, just prior to the filing, in effect, nullified the contractual obligation that was assumed by WMI in the DIME merger of 2001. WMI, was no longer the possessor of the 15% agency obligation that it undertook in 2001. It also, was in breach of its obligation to navigate the Anchor Litigation by failing to inform the LTWs of the change in its litigation obligation and it thus, can no longer claim to be a party in this matter.
THEREFORE:
WHEREAS: The proximity of the failures of The Anchor Bank, the failed institutions that it acquired, the near collapse of Dime Bank itself, as well as, the wholesale failures of savings institutions throughout this Country at the time of the issuance of these LTWs, it is of particular note that, the literature and the Warrant Agreements of Dime and WMI, never specified a scenario contemplating Bankruptcy. This had to be deliberate. This obvious omission speaks volumes as to the perpetual value of these LTWs. Specifically, that they are not to be subject to Bankruptcy discharge, precisely, by virtue of the very nature of the claim, being perpetual and conditional only to, receiving 85% of the net proceeds from the Anchor Litigation, these signify that the LTWs are not transferable or dischargeable thru Bankruptcy.
Neither are these instruments subject to adjustment or nullification in the Bankruptcy of the institutions that are directing the Anchor Litigation. These entities were acting strictly as agents in return for compensation (15%). Indeed, there was, already, a double transfer of the Litigation execution obligation before the Washington Mutual takeover; firstly, by Anchor, and secondly, by DIME.
It is evident that contemplation of Bankruptcy, was an ever-present possibility to these two institutions, yet, the framers of the Warrant Agreement never entertained the possibility of Bankruptcy to issue instructions for succession in such circumstance, since the Anchor Litigation was out of the realm of such consideration. The Anchor Litigation will either be won, and the LTWs redeemed, or it will be lost, and the LTWs will become worthless. No more no less.
WHEREAS: The “transfer” or assignment of the Anchor Litigation to JPMORGAN CHASE BABK by the FDIC took place prior to the Holding Company’s Bankruptcy. The LTWs claim is alive and well, nestled in the books of JPMORGAN CHASE BANK. The obligation to prosecute the Claim is transferable, for a 15% reward, but the 85% of the Award is not transferable or assignable, it remains firmly in the hands of the LTWs owners.
WHEREAS: The Board of Directors of WMI, the holding company, failed to exercise their duty to notify the holders of the LTWs of the changes that were made as a result of the takeover and Bankruptcy proceedings, they are in breach of their duties under the Warrant Agreement. By virtue of the above actions, the Anchor Litigation was no longer a proper responsibility of WMI at the time of its Bankruptcy petition.
WHEREAS: In light of the FDIC and JPMORGAN CHASE BANK claim to ownership of the Anchor Litigation, it speaks for itself, that the Litigation obligation has been transferred to JPMORGAN CHASE BANK prior to the Bankruptcy of WMI, and cannot be part of the Bankruptcy proceeding in this Court. This matter does not, therefore, come under the jurisdiction of the United States Bankruptcy Court for the District of Delaware pursuant to 28 U.S.C.§§ 157 and 1334.
WHEREAS: The LTWs were to be the beneficiaries of a $337 Million set-aside by this Court. The A7POR is an attempt to confiscate this set-aside; the A7POR calls for the LTWs to “share 30% of the Newco, pari-passu with common shareholders of the old WAMU”. How can this be achieved when the nominal value of Newco is established at $210 Million? That meager sum is then to be apportioned to owners of Classes of 16 thru 21. Further, whatever pennies are salvaged, they are to be shared with the owners of 1.7 Billion shares of the old Washington Mutual Inc. in an as yet unknown percentage relationship to each other and the whole and an unknown dollar value per share. Despite Mr. Steinberg (Plaintiff) petition to this Court to have the distribution explained in plain English, we have not yet received an explanation of the contemplated distribution percentage or its value. The Warrant Agreement stipulates, “to transfer the VALUE”, as reflected in the Award. . This is a blatant attempt to disenfranchise the LTWs. the Stipulation has no “value” to convey. It is, in fact, an empty shell.
WHEREAS: The “trigger” event has not yet occurred in the Anchor Litigation, that is, the defendant in the Litigation (FDIC) has not made payment of the Award; as a result there is no action that can be taken by this Court to create such a “trigger”. By co-mingling the LTWs Award funds with those of the common shareholders of the pre-Petition owners of WMI in a dubious distribution of minimal value, this Court will be assisting in the nullification of the rights of the LTWs to claim any part of the Award. This was never the intention of LTW Warrant Agreement. For this reason alone, the Plan of Reorganization and the Stipulation should not be implemented.
WHEREAS: Further insult to the LTWs holders, under A7POR they are required to sign off on an agreement that exculpates the WMI Board of Directors and the Debtors, as well as, to permanently surrender their right to any further claims from the Anchor Litigation
WHEREAS: After nearly seventeen years of litigation, the LTWs rightfully stand to be the primary beneficiaries of the Anchor Litigation Award. The final status of The Anchor case versus the FDIC is Stayed in The United States Federal Court of Claims pending the outcome in this Court. It would be a Gross Miscarriage of Justice to snatch this Award from the rightful owners, the LTWs, by devious machinations and collusion on the part of the FDIC, JPMORGAN CHASE BANK, and the Debtors in Possession of WMI.
IT IS THEREFOR ORDERED: That the LTWs be extracted from this Bankruptcy proceedings and be remanded to its proper venue, the United States Federal Court of Claims for final determination of claim amounts and payment method.
The Motion of Debtors for Approval of Stipulation between the Debtor and Class Represented by LTWs Holders is hereby, denied.
All ballots for accepting the Stipulation by LTWs are to be nullified and destroyed.
The Seventh Amended Plan of Reorganization must be amended to take into account the aforementioned circumstances.
Be it so Ordered.
This _________Day of ____________2012
So Ordered_______________________________The Honorable Judge Mary F. Walrath Presiding.
Submitted this Monday the 23rd Day of January 2012
J. PHILIP MAX _______________________
46 Maple Avenue
Cedarhurst, NY 11516
Notarized before me this __________Day of January 2012
____________________________________NOTARY PUBLIC
My Commission Expires_______________20__
Service BY USPS EXPRESS MAIL to:
Clerk of Bankruptcy Court
824 North Market Street
3rd Floor – In re Washington Mutual
Wilmington DE 19801
Service by USPS PRIORITY MAIL to:
Brian S. Rosen, Esq.
Counsel for Debtors WMI
Weil, Gotshal & Manges, LLP
767 Fifth Ave
New York NY 10153
King & Spalding
Arthur Steinberg, Esq.
In re WMI
1185 Avenue of the Americas
Ne
