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Zitat patience360...:
I look at the confirmation hearing this way. Before the hearing, I posted “Our Objectives as I see them”, outlining the objectives we should aimed at. After the hearing, I ask myself the question: did we advance our objectives yet or not?
(1) Fate of NewCo. Zelin said the NewCo is a dying business in winding down, run-off mode. Reinhold said any attempt to use WMI NOLs will not overcome the hurdle of IRS Sec.269, which disallows the tax benefits under certain conditions. In short, NOLs are worthless, and NewCo worth just a little (a couple hundred millions). Our guys (Maxwell and Anderson) countered that the NewCo can be run and financed as a going concern to make profits while preserving the NOLs. This way, Sec.269 won’t be triggered. In fact, Sec.269 is rarely used in practice. Furthermore, IRS Sec.382 calls for “old and cold” shares in order to preserve the value of reorganized company. Clearly, our side provided a much superior path to utilize NewCo’s resources. It will generate jobs, make profits, and benefit the shareholders. The Judge once said, “Well, let me posit this. The valuation comes back that the reorganized debtor is worth ten billion dollars (note: a hypothetical figure). Isn't that something I have to take into consideration when I determine who is getting the equity in that entity and whether or not those creditors are receiving more than they're entitled to under the plan?” For NewCo, the key is not its current asset value ($150M - $350M), but future value including business potentials and NOLs (no matter NOLs being $5B, $17B, or $23B). It’s also a fairness issue, as the Judge implied. This is my view. Of course, the decision is up to the Court.
(2) FJR. As TPS argued, there are multiple legal grounds (BK Code Sec.726, 1129(a)(7),(b), and case precedents) that FJR should be applied instead of contract rate. This is despite IT allegations. In my mind, IT is a black and white issue. You either committed IT, or you don’t. In reality, there are many grey areas and obfuscations. Even so, EC has uncovered plenty of dubious activities related to both trading and GSA negotiations, and there are ample grounds for the Court to impose FJR. IMO, we have at least two shots at FJR, with or without IT. Again, it is up to the Judge to decide.
(3)As I said, the disallowance of claims is a life and death issue for SNHs. They will fight hard to prevent it. The Court will understandably exercise great caution in the decision on this issue too. To me, the so-called “ethic walls”, confidential agreements, etc. are just the mechanism for cover up of wrong doings. They are useless in preventing IT activities. For instance, knowledge is cumulative and has staying power once acquired. It enables you to become a better, informed decision maker no matter it contains positive or negative information. It doesn’t suddenly disappear at the end of some arbitrarily self-imposed time period. Even though the same information were disclosed to the public later , the insiders still had clear advantage over non-insiders, especially when the information were not disclosed fully on some occasions. Another argument of SNHs was the information they received were not final. The positions of opposing parties were often “billions apart”. So they are non-material. Well, as I said, knowledge is cumulative. In and out of negotiations are themselves valuable experiences that enable the insiders to develop the knowledge and expectations of each other’s positions, as well as the correct perspectives of the case in general. Such experience by itself gave insiders tremendous advantage over non-insiders in making more informed, intelligent decisions, including trading decisions. It’s disingenuous and not credible to say the knowledge about specific offers or term sheets are “non materials”. Their arrogance even made them believe that the knowledge about settlement negotiations is not important to the investing public.
This is also an issue of double standard. As we know, EC received settlement proposal from the debtors/SNHs on 03/20/2011. If any EC members traded WMI equities prior to 5/20 news leaks, they could have tripled their money easily even though the settlement talks fell apart later. Can they justify their “trades” as legal, and their inside knowledge about the offer as “non-material” since it was not “final”? Of course, this never happened because EC had rules and they followed them letter by letter. This hypothetical scenario illustrates how erroneous, arbitrary, and self-serving SNHs arguments are.
Another example of taking advantage of inside knowledge for trading purpose is the development of trading models based on inputs from settlement negotiations. Aurelius witness admitted their trading model regarding WMI was constantly updated with information including settlement negotiations. Sure, they built soundproof office, and didn’t talk to each other about negotiations. But, somehow the information got into the model that was supposed to serve as the basis to make trade.
Should the claims of SNHs, partially or completely, be disallowed based on the IT discoveries revealed so far? I believe so. But, I can’t read into the Judge’s mind. The ultimate judgment and decision are hers.
(4) GSA itself. Viv said, “the EC effectively impeached the credibility of each of the debtor and SNH witnesses, and, perhaps more importantly, peeled back the layers of b.s. for the judge to actually see how the GSA came into existence and how inconsistent it is with the debtor's duty to maximize estate assets. (Reminds me of the old story about meat eaters not wanting to see how sausage is made.) ” This is so very true. Like I said, another key point is, did the Court know about JPM's real position on $4B deposits early on? Were those funds (deposits) truly disputed as displayed in public or the whole turnover issue was just theatrics? FDIC even had the audacity to threaten the Court on it. This goes to the core of "good faith" issue. Even though the Court acknowledged there is a high likelihood the debtors would prevail on the turnover issue, I believe the appeared-to-be highly contentious nature of the issue had some influence on the Court's view of GSA in general. She might view the settlement of deposit issue by GSA as a good (reasonable) bargain for the debtors' estate for mitigating some of JPM and FDIC claims. If the turnover fight was just an illusion, the Court should feel outraged at deceptions and reconsider her "fair and reasonable" opinion.
Well, can I now answer my own question “did we advance our objectives yet or not”? Yes, We (EC) did. But, I don’t have the clue what the Judge think about the testimonies and how she will decide. In fact, I refuse to read into the Judge’s mind any more. It’s futile. We can only control what we can do, and continue to make our best efforts. I rest my peace of mind in the frequently-frustrated but never-dying hope that the justice will prevail ultimately.
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Zitatende
MfG.L:)
Alles nur meine pers. Meinung, kein Kauf- oder Verkaufs-Empfehlung!