Until now WaMu and its creditors had argued that shareholders were entitled to nada under the reorganization plan. Senior noteholders owed $4.13 billion are scheduled to be fully repaid with interest, as well senior subordinated noteholders owed $1.67 billion, under the original reorganization plan.
Under the plan WaMu would distribute more than $7 billion in cash and tax refunds and reorganize a reinsurance company that has the right to offset taxes on future profits with losses from the former bank-holding company. But to do this they must keep the company intact!
The current deal would include the court-appointed committee of WaMu’s equity holders, WaMu, and four hedge funds that helped negotiate the current reorganization plan: Appaloosa Management LP, Centerbridge Partners LP, Owl Creek Asset Management LP and Aurelius Capital Management LP.
The parties to the negotiation haven’t decided how to split equity in the reorganized company between preferred and common shareholders. This is far from over. Much still needs to be decided and even at that the whole deal could collaspe from within. One has to wonder if a Senate Invesigation might have help move this along.
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