Replies to post #289 on TMST, Inc., 8% Senior Notes (TMA.GB)

[Enterprising Investor]

Purchased bonds via ZionsDirect. The commission was a flat rate. ZD moved clearing from NFS (Fidelity) to IB. I went ahead and moved all my positions over to Fidelity. ZD had incredibly low margin rates - a loss. Consolidation produced a larger collateral value. I have not looked back at ZD.

JPM and the others will most likely lose if the case goes to trial. The facts of this case mirrors all those before it. The only thing different is the dollar amount of $1.3 billion. I suspect this case was filed last for a reason. Those ahead of it were trial balloons. No pun intended.

Holders of Senior Notes are first in line when it comes to the waterfall. Holders already received assets from the distribution of ADFITECH (and the reason why my basis is less than $0).

One of the issues plaguing the JPM case is the never-ending struggle for the defendants to get information about MatlinPatterson's role in the reorg and litigation process. The defendants wanted to know who held the Senior Subordinated Notes on four specific dates. The judge told them that the trustee only had to release a holders list for two dates: (1) after initial offering and (2) at the filing date. The defendants are not allowed to see transfer activity, if any.

The reason why I bring this up is there is a transcript available that shed lights on why the defendants want access to information on MP. It also answers your $3.3 billion question. Simply, MP will not have some large windfall, even if the Court rules for the plaintiff in the full amount of $1.3 billion because the first $266 million flows to Senior Notes. The recovery would change dramatically if the Court once again ruled that prejudgement interest would be 9% versus the FJR based on the time element at play.Then again, the contingent legal fees will chew up a big chunk of award.

Based on the what I read in the transcript, the defendants really want to move forward in getting this case resolved. One of the defendants actually admitted that it is unable to provide pricing data on specific dates. Whoops! When I read that, it reminded me of craziness of MBS pricing in the film The Big Short.