sehr exakte summary !
Some thoughts of mine about confirmation hearings so far...
{Sorry - I know my participation here has been light as of lately -- that stupid "real life" thing has been interfering.}
In short – as many here know, “numbers” aren’t the strong suit of Catz. I stay clear of them, in fact get allergic reactions to them. But, the point of the last three days wasn’t to come up with a number – it was to show that ANYBODY who ends up with the NOLs would exploit them. It’s just because there’s too much there.
It’s being pounded home that the lie, and it IS a lie, of the POR is that WMMRC is a morbid runoff, 2 person company - and when it’s dead, it’s gone, and that’s it.
The EC is making it clear that the Hedge Funds aren’t stupid. But neither is Equity. Nobody who ends up with WMMRC will let it ‘just sit there’ when there are NOLs that can be turned into cash, over a decade or more, but that’s the way long-term money thinks, and the way that NOL consumption will take.
So basically, while dry and numbers-boring, the first three days were spent going to the core of the POR and the waterfall. That it was gerrymandered, and has the debtors and the hedge funds in cahoots together to proffer it forward. And it’s so blatantly biased that it’s not funny. And the court is being shown that.
My read is that we’re seeing things evolve into a few key points:
1) As before, the court shouldn’t confirm this POR either. Undervaluing, etc reasons.
2) The hedge funds have done egregious things and their claims should be disallowed, subordinated, etc, etc
3) The debtors have failed to deliver on their role as protector of the estates constituencies --- which includes equity
4) And by way of back-door -- the F&R ruling of the GSA should be reconsidered because of new facts – specifically the ANICO reversal means that those torts have significantly more value than they had before.
Before continuing, if you have not read the EC's "play book" -- that is, their "POR Objection" -- then you must. PERIOD. You must. If you haven’t read the confirmation objection, then things look haphazard so far.
Go here: www.kccllc.net/documents/0812229/0812229110712000000000032.pdf
When you pull out the bold points from the EC’s objection, I have done so with a * in front of them below. It becomes clear where they are going – and step-by-step what is coming up. The only thing we are missing is the sequence.
What we have seen (or seen part of):
* - Reorganized WMI Is Undervalued.
This is primarily what the first three days of confirmation was about. It’s dry, boring, etc. But it’s key to get the competing expert reports out there. And to show that there is a serious undervaluing going on with the NOLs, etc.
* - Post-Petition Interest Should Be Paid At The Federal Judgment Rate.
This has been touched on in the first three days, but I expect much more on this.
And that’s about where we are. There’s a WHOLE BUNCH more to occur. I don’t care how long the debtors thought the confirmation process would be – we clearly see it will take quite a bit of time to get through items. I’m glad we’re (the EC) is not rushing things “just to get to the next thing”…. It’s in our interest to make it sure that we get our points out.
COMING ATTRACTIONS:
* - The Plan Cannot Be Confirmed Because It Is Not Being Offered In Good Faith.
* - The Supposed "Reorganization" Is A Sham To Preserve Debtors' Control. ..."this Plan's true purpose is the distribution of $7 billion in WMI assets according to the Code's priority scheme. This Plan is a liquidation, pure and simple."
* - Debtors Ignored Claims Against WMI's Directors And Officers.
* - Debtors Favored Certain Powerful Creditors And Disregarded Obligations To Equity And Other Constituents.
* - Process Of Negotiating The GSA Was Dominated By The Four Settlement Note Holders.
* - Settlement Note Holders' Claims Should Be Disallowed Due To Their Misuse Of Confidential Information Obtained In The Bankruptcy.
* - Aurelius And Centerbridge Traded On Inside Information.
* - Settlement Note Holders Are Fiduciaries To Creditors, Estate, And Equity
* - The Debtors Abandoned Their Fiduciary Duties To Equity Holders By Allowing The Settlement Note Holders To Hijack Negotiations Of The Global Settlement To Maximize Their Own Profits.
* - The Plan Improperly Conditions Distributions on Claimants' Agreement to the Third-Party Releases.
* - The Plan Cannot Be Confirmed Because It Is Not Feasible As Required By Section 1129(a)(ll).
* - Distribution Of Estate Assets To Non-Estate Creditors Is Improper Under The Bankruptcy Code.
* - The Plan Is Not Fair And Reasonable - "For the reasons previously set forth at the last confirmation hearing, the Plan is not fair and reasonable. While the Equity Committee has promised not to relitigate that position at this confirmation hearing, rather preserving them for appeal, a recent decision issued by the D.C. Circuit should respectfully cause this Court to reconsider its prior decision"
All of these items are straight out of the POR confirmation link I gave.
{If any of these * items have you confused. FIRST, go to the EC's POR Confirmation and read that bold title section -- it explains it better than I can}
PRINT THIS OUT -- start "checking off" this play-book summary as the EC makes it down the list. Temper your patience. It'll take a bit to work this through. As we saw, it's not going to happen in just 3 days.
My Summary: The Playbook looks fantastic. Much better than the last time around.
And patience is required. It has been for nearly 3 years, and it certainly will require patience to get through these confirmation hearings. Having anything "rushed" is not to our interests. This "rush" to approve a POR, 'any' POR, is the debtors game. It must NOT BE OURS.
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