Replies to post #19938 on Washington Mutual Preferred fka WAMPQ

[mordicai]

Well for one, you cannot pay the WMB bondholders with WMI money which otherwise would be earmarked for equity.

[kirby96]

The judge wouldn't just be 'tacking on' something extra because she feels like it.

WMI has assets. It also has liabilities. The holders of those liabilities have different rank in seniority. Because the more senior creditors rank first, the whole notion of bankruptcy recognizes that they are not incentivized to maximize value to everyone. Creditors senior to class 19 (preferreds) don't care if WMI's assets are actually worth 9 billion, or 15 billion or whatever. They just want to get 7 billion for the assets so they are made whole. They want to fire sale this, get it over with and get their check.

That's precisely why there is a judge. To ensure the resolution is to the benefit of ALL CLASSES. If the classes senior to preferreds only need $7B, but the judge believes WMI is worth $10B (because maybe the EC convinces her), she WON'T allow any distribution to occur that won't get that $10B.

She's not just 'tacking on'. She's ensuring the estate generates it's full potential value. See the difference?

[Jestiron]

The assets exist already to take A>L. Right? If this is true, then Debtors (WMI, not WMB) already are covered 100% as they are included in the "Liabilities" section. Given this is true, they should be walking away smiling!

BUT THEY AREN'T....

Why?

Because they are trying to tell the court, and now the media is telling the public, that A<L still.

Why?

Because if they pull it off, the Debtors could walk away with newly issued common shares AND all of those assets that have remained buried throughout this whole process. (I'm wagering that this is an insanely high number.)

I guess what I am saying is that legal teams are known for lying about the value of assets for this exact reason. But in this case,...the debtors also seem to be working to block current equity from all of the remaining assets by hiding them even beyond A>L. Using the waterfall analogy...Weil is diverting the waterfall away from equity holders. They betray us.

As usual; All In My Opinion

Jest