After Weil's initial motion to disband newly formed official EC, many shareholders were willing to give them the benefit of the doubt, myself included. I even advocated that Weil and EC should be ally working together against our common target JPM/FDIC. Yesterday's filing by Weil of debtor's response to EC, however, was such a huge upset that destroyed any remaining shareholders' trust in Weil instantly. As Mad stated, "I'm done with Weil."
So why is Weil so hostile towards shareholders and attempts to fight EC like hell? Is it because of settlement money? Weil's masters (creditors/bondholders) do not like to share any dollars with shareholders? In the end, it is about the money, both settlement dollars and the future gains following WMI’s reorganization. But right now, however, it's all about the control. Who, creditors/bondholders or shareholders will take control of WMI. It's highly likely, as many board members pointed out, the debtor, JPM, and FDIC, with Weil as mediator, were very close to reach a settlement with creditors/bondholders taking over WMI as a whole without any participation of shareholders. It's a gift given away to big interests, again. With EC installed by U.S. Trustee under "exigent circumstances", their plan (of settlement and reorganization) was disrupted and threatened. As we recall, Weil was brought in days before the seizure. It's also agreed that Weil was hand-picked by Bonderman. It’s also known for a long time that Bonderman had withdrawn himself from WMI's board early on during the bankrupcy process. It's very telling that Bonderman and none of other major shareholders are present at EC, not even at the meeting of its formation. Putting pieces together, I can’t help but think that the big interests might have taken huge stakes in WMI bonds so the perfect explanation of mythical rise of bond prices in the past months. The big whale, who has been swimming silently, now surfaced, although we are still not so sure the individual names inside the whale. But it's clear, the big whale (collectively called creditors/bondholders) wants to swallow the whole estate of WMI, with nothing left for shareholders. Sorry for them, EC disrupted their plan. They are upset and desperate.
Another thing in Weil's reply that upsets, confuses, and worries shareholders is their claim of "$50b unliquidated claims against WMI estate." I pointed out before that where are the missing liquidation values from WMI against JPM/FDIC in Weil's initial objection motion? The EC council sees that too. Now Weil came up with the counter-argument "You (shareholders) think you can wave $20b unliquidated claims [against JPM/FDIC] in front of the court [to justify EC’s existence.], what about the $50b unliquidated claims [against WMI]?" To slap back on their arrogance, I’d suggest, just like some board members pointed out, if Weil truly believes the $50b claims, then the creditors/bondholders are toasted. Then, why are WMI bond prices at mid to high 90s? There is no way they truly believe it. It’s disingenuous for them to make such an argument. To calm our nerves, I’d like to summarize some of board members' wisdom about this issue. (1)"…Their argument is if the equity committee is going to reference $20B in claims that haven't been won yet, what about the $50B that hasn't been expunged yet. They fail to mention that most of the $50B is likely to be expunged and most of the $20B is likely to be recovered for the estate."(by fla_gator). (2)" IIRC, 10 billion is the bogus IRS claim. If we receive a tax refund, I suspect that claim won't stand." (by gibson). (3)"fla_gator and gib have it right, as usual. As discussed long ago, that IRS claim is basically a "placeholder" it filed just as the exclusion date expired just in case they ever came up with a theory of recovery, which they have never articulated. As I recall, another $30 billion dollars is accounted for by a preposterous claim by a pension fund which is suing WMI under some kind of negligence theory, even though its actual investment was a small fraction of the claim." (by viv. All quotes are from ghost's thread "KCCLLC/PACER Documents Galore" of last night.).
If we can see the flaws in Weil's argument, the EC members, its legal council, U.S. Trustee, and the Judge can see them too. Weil’s arguments can fool some of the people. They can't fool all of the people. They can't fool the Judge, U.S. Trustee, and EC, that's for sure.
In conclusion, EC's formation must hit someone’s nerve really hard. It's a good sign. Once EC is affirmed by the Judge, I see no reason that shareholders will not receive their justifiable, long overdue recovery.
