Opinion de Patience360 ( es preferible para todos llegar a una solución que seguir con una disputa legal)
The Case for a Multilateral, Holistic Solution (1)
I’ve said multiple times this case call for a multilateral, holistic solution. I’ve also discussed my reasoning for it on several occasions. In summary, (1) IT charges tainted the “good faith” aspect of GSA. As Nate said in WSJ “it was unfair that hedge funds were able to eventually negotiate on behalf of trust preferred holders, seeing as they were also bondholders and involved in settlement talks. He questioned whether they were acting in all of the preferred holders' best interests.” Clearly, it’s not just unfair, but also an action of lack of good faith on the part of SNHs (Interestingly, Nate’s last comment is closely resonant with EC’s argument “the Debtors failed to consider the interests of all stakeholders”, which was voiced in the closing argument at Dec. hearing). However, the impact of “good faith” argument on GSA as a whole, imo, is limited. This observation, I admit, is different from my previous thinking on the same issue. Previously, I thought IT charges, once proved, will show GSA was not negotiated in good faith, and therefore it should be tossed out. I’m now thinking this argument has its limitations. The Judge’s opinion of “fair and reasonable” was based on the compromise between the debtors, JPM, and FDIC. That is the core of GSA. JPM, FDIC, and the debtors are likely able to insulate GSA from the fallout of “good faith” argument by declaring (proving if necessary) they had nothing to do with SNHs’ insider trading activities, and had been negotiating with one another in good faith. That’s a huge burden of proof on the shoulders of the adversaries to prove it otherwise. For GSA parties, it is ideal to isolate the impact to NewCo. Keep in mind, Nate’s initial charge was directed at Piers (H) shares and the reorganized company. To have broader impact on GSA, good faith argument alone is not enough. You need to have FJR and equitable disallowance at play too. We know EC has done researches on both issues, and can argue about them in the court on behalf of shareholders. However, the decisions on those two issues, especially equitable disallowance, were entirely in the hands of the court. Since no party knows for sure the strength of EC’s investigations and arguments as seen in the eyes of the court, it’s a risky move to go the litigation route for any party when facing such uncertainty. Both Equity and SNHs have their chances to either win big time, or conversely, lose hugely. If the court side with Equity on all IT accounts, it can shake the core of GSA, which will place shareholders and JPM, FDIC in a face to face battle and maneuvering. No one likes uncertainty with so much at stake. It’s therefore necessary and smart move to have all parties come together, sweeten the pot for Equity and other left-out parties (in other words, adjusting GSA) to make the whole mess go away. This is one of the reasons that call for a multilateral, holistic solution. (That being said, contrary to some misleading claims, IT charges have not been taken off the table by EC, neither is the debtors’ POR 6. Both battles will be very unpredictable, especially for shareholders if parties choose to fight rather than talk (e.g. settlement talks fall apart in the unfortunate event).
I maintain the view that the changes in control of WMMRC from SNHs to equity holders will bring the pressure on JPM and FDIC. Seeing the chance of shareholders in control of a valid organization from impossibility to near reality, in my view, is enough to get both JPM and FDIC’s attention and concern. As long as we do not give up releases no matter what form of organization and funding shareholders hold (NewCo or Litigation Trust), we are a threat to them. The key is Releases. Remember, in her opinion, the Court is sided with the equity on this issue. I doubt EC and Susman will give up the Releases so easily without first forcing some concessions from JPM and FDIC. Of course, JPM and FDIC always have the option and resources to declare war on Equity by refusing making any concessions. As I said, this is a major puzzle that remains to be seen. However, do we get their attentions? Yes. I believe so. As charlien and others pointed out there were ten JPM legal and company reps who either attended in person or listened in to 06/08 hearing, they sure have concerns (about the emerging new deals). This is another reason, I believe, that call for a multilateral, holistic solution to end this madness.
Because of my previous background, I tend to look at the current case development from the perspectives of power struggle and power maneuvering. I could be terribly wrong. But, this is the best possible guesstimation I can come up with based on cold reasoning but without any inside knowledge of what’s happening behind the closed doors. Treat it with a grain of salt.
