Replies to post #7889 on Rocket Companies Inc (RKT)

[DocKB]

For what it's worth, again (repetitious, but maybe clarifying for some):

Gemini said----
In the Washington Mutual (WMI) bankruptcy case, the Sixth Amended Plan (Plan 6) was a pivotal but ultimately unconfirmed step that laid the groundwork for the eventual liquidation trust.

The user post you are viewing highlights a common point of confusion: while the case eventually settled under Plan 7, much of the "Plan 6" framework—specifically regarding the Liquidation Trust (LT)—was discussed and partially established during the Plan 6 hearings.

The Contents of the "Plan 6" Liquidation Trust
Under the Plan 6 structure, the Liquidation Trust was designed to manage assets that were not immediately distributed upon the plan's effective date. Key contents and characteristics included:

Initial Funding: It was designed to be funded with $20 million specifically for litigation (the "Litigation Funding"), often split into tranches to be overseen by a Litigation Subcommittee.

Asset Transfers: The trust was intended to hold "Liquidating Trust Assets," which included all remaining rights, titles, and interests of WMI and WMI Investment Corp. that were not distributed directly to creditors.

Control Mechanism: A significant development during the Plan 6 hearings was the Equity Committee (EC) requesting and being granted a level of control over the Liquidation Trust. This was intended to ensure that equity holders had oversight of the recovery process from remaining assets.

Purpose: The trust was strictly a "liquidating" entity, meaning its sole legal objective was to convert assets to cash and distribute them to beneficiaries, rather than engaging in ongoing trade or business.

Plan 6 vs. Plan 7 (WMI-LT)
The WMI-LT (WMI Liquidating Trust) that most investors are familiar with was technically established under the Seventh Amended Plan (Plan 7).

Why "Plan 6 LT" is Often Overlooked
As noted in the forum post, many modern summaries (and AI models) focus on Plan 7 because it was the final legal reality. However, the transcript of the Plan 6 hearings is where the actual "funding" and "establishment" of the trust oversight was argued and won by the Equity Committee. This "Plan 6 LT" provided the structural template that was eventually refined and adopted in Plan 7.

[ron_66271]

The Derivative Market Meltdown of 2008.

Very few people understand the Derivative Markets and the Community Reinvestment Act.

An ACORN attorney sued a Chicago Bank for not implementing the CRA and won by design.

This forced banks like WaMu to make loans to unqualified borrowers.

Therefore RMBS/CMBS were created to sell the mortgages into the market as securities, which took the loans off the books of the bank, and the securities were insured against losses from derivatives like CDS/CMO.

Therefore no loss to the RMBS/CMBS investors, or the banks that invested in the offering

The Banks bought one another’s offering to remain in the cash flow.

Security investors topically received three payments;
Two interest payments and one performance payment at the end of the year.
Topical performance payments were ~$230 for P’s.

WMIIC, It gets better;
WMIIC invested in the offerings and passed on the cash flow to WMBfsb.
That’s why WMBfsb had $40 Billion after the ‘run on the bank’.


The Derivative contract writer’s still needs to cover the Trusts losses.

Putback’s;
The Securities were overfunded by a factor of two(2) as proven by the WMB Notes and Preferred Funding.
Therefore the defaulting loan is replaced from within the Trusts and not the offering banks.

According to the FDIC “WMB Securitized $2 Trillion in RMBS of which $500 Billion was sold to F&F”.

WMI/WMB never offered $2 Trillion in securities.
Proof that the securities are overfunded.



Ron