October 6, 2011 Washington Mutual
Boy, was I surprised when I walked into court today! Somehow, in my mind, the Judge had been clear enough with her order denying plan confirmation and ordering mediation, that I thought today was going to be a slam dunk...yes, I know that the Debtors had tried to position themselves as the saviors...opening the door to the possibility of a quick end to the bankruptcy...but I never expected the salvos of gunfire to be heard. Boy, was I wrong!
Arriving late, because of an accident clogging the city streets, I squeezed in to the last seat available in the courtroom. Later arrivals carried chairs in and made a new row in the back of the room. Key players from every party were there,,,Debtors, JPM, FDIC, TPS, UCC, Tricadia, EC, HFs...it was a sea of alphabet soup in the room, and everyone felt compelled to rise to speak.
As usual, Brian Rosen was well spoken and attempted to navigate to a quick settlement and payout of all creditors, including the disputed SNH's claims. A slick potential loophole in both the underlying BK law and the language used by the EC allowed him to at least try this approach. It was clever, and while ultimately unsuccessful, he was confident in his presentation. Unfortunately, at this point in this case, I'm not sure there are many in the case who trust that what the Debtors say is what they mean...we all have enough experience getting burned at their hands to know to look for the hidden agenda. Luckily, JMW has also gotten hip to this and asked several questions that helped to uncover potential hidden agendas...like after all the time spent previously in the case schooling us on the use of NOL's and their decreasing value to the estate as the year progresses, JMW is savvy enough to ask "why now" vs waiting until after the first of the year...
Parker Folse speaking for the EC, handily rebutted Rosen's arguments...deftly and with his quiet strength. Having seen Parker on several occasions, I could tell that he was pissed and incredulous with the way Rosen painted the EC and our intentions. Point by point, Parker showed JMW just what the issues for mediation actually were, vs. the slick presentation made by the Debtors. As each party to the GSA rose to speak, the arguments were fairly predictable and along fairly clear party lines. Aurelius was a clear exception, with Ken Eckstein choosing to be politically correct and stradle the line, agreeing with parts of both the EC and Debtors arguments.
Sachs for JPM and Califano for the FDIC both took the opportunity to remind JMW that the GSA was due to expire shortly, and would then be open to re-crafting. And while I believe that one or both may need to come to the table to see a settlement accomplished, both denied any intention of doing so.
In the end, JMW saw the folly of allowing a settlement to go forward now, with SNH's owing the money back should they be found guilty of IT allegation, and encouraged all parties to play nice with the mediator and get this quickly wrapped up. She directed both JPM and the FDIC to stay in the GSA for at least a month until the next omnibus hearing, at which time she expects to get one of three reports...1) with more time, we can achieve settlement 2), we have achieved settlement or 3) no way!
There is still one item that needs to be heard tomorrow, so I'll be back tomorrow afternoon with more...until then...these are just my observations.
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