WaMu Hearing July 20 / Examiner Approved!

by Kyle on July 21, 2020

Judge Mary Walrath approved the Equity Committees motion for an Examiner in the case of Washington Mutual, (WAMUQ, WAMPQ, WAMKQ, WAHUQ). Here is a quote from her ruling;

Let me just make my ruling, I think I’ve heard enough. It seems that all parties are now on board that the appointment of an examiner may help the process here except the WMI Noteholders Group, which suggests that nothing has changed since my original denial of the shareholders’ motion for an examiner in May. But I disagree with that analysis. At least three of the factors on which I relied turn out to not be true at this juncture. I had found the Debtor had been investigated to death, the Equity Committee would be able to conduct an investigation that was appropriate, and that an examiner was not a good substitute for the litigation process. Quite frankly I’ve found that the litigation process is not adequate in this case. There have been inordinate delays and impediments to discovery by all of the parties who have a stake in this case in connection with the confirmation process and that has just convinced me that an examiner is necessary, both to reduce the cost of litigation and to assure that all parties have a forum through the examiner for consideration of their positions. Not simply on the merits of the global settlement but on really the value of the Debtor’s assets, both those being settled and those left behind, and the appropriate distribution of those assets under any Plan. I think I made it clear that I think I am not in a position to deal with confirmation at this process… at this juncture… given the inability of the parties to fully investigate or consider all of the claims. I’m not in a position to decide the reasonableness of the settlement at this point without some assistance and I believe an examiner is a good way to go, with the caveat that I agree that this process has to be controlled. The examiner cannot be given carte blanche and no deadline within which to conduct an investigation. There’s no substitute for a Congressional investigation. (1:55:39) I will appoint an examiner, will do a dual track with the Plan process. There seems to be some agreement between the Equity Committee, or of the Equity Committee, with respect to the scope articulated by the Committee… Creditors’ Committee. There has been some argument that the scope should be limited only to the merits of the settlement… global settlement agreement, and that no looking behind the scenes as to what the Debtor may not have considered is appropriate. I’m not at this point willing to agree with that limitation. But I will do the following. I will give a short time for an examiner to be named and have preliminary meetings with all of the interested parties, specifically the Debtor, the FDIC, JPMorgan, the Equity Committee, the Creditors’ Committee if I didn’t mention them. And I want a preliminary work plan prepared by the examiner and presented to the Court before the August 10th hearing. I will not require that it be a week but if it can be filed by August 6th so that all parties can comment on it by the August 10th hearing. Secondly I will direct the examiner to commence immediately, even before the August 10th hearing, a review of the documents that the Debtors and the Committee have assembled in the discovery depository. I will give the FDIC the opportunity to present its legal arguments to the examiner immediately as to the legal impediments to any claims that the estate may have against it or any other parties that are governed by the settlement, and I will allow the other parties, to the extent they already have prepared legal memoranda or attorney work product, will direct those parties to present them to the examiner. If they’re not presented to the examiner that will play in my consideration later as to what additional discovery or investigation need be done by the examiner, but I strongly urge the parties to consensually provide sufficient information to the examiner to convince them of their belief that any further investigation is not warranted. (1:58:14) I would like a preliminary report by the examiner by the September 7th omnibus hearing regarding this… what it has done to date… he or she has done to date, and what more needs to be done to complete the legal analysis and review of the documents that have been produced. If I am convinced that no additional discovery is needed I would order a report by October 8th. If I believe that additional discovery or review of documents and legal analysis is warranted that deadline may push out. On the dual track, I will consider at the September 7 hearing the Disclosure Statement. I will not consider any additional revisions. If the Debtor has no further resolution of issues with the parties I will consider the adequacy of the Disclosure Statement as it is finalized by the Debtor. Based on the preliminary report from the examiner I will determine whether we can proceed with the confirmation hearing on November 11. I’ve reserved time at that time and I’m not convinced at this point that we can go forward, but I think the person we need to hear from is the examiner. The discovery motions sought by all the litigation parties I will continue to the September 7th hearing. I think it’s more appropriate at that time to determine whether the confirmation discovery should commence immediately, if we’re going to have a November 1st [sic] confirmation hearing, or whether the matter’s going to be pushed off somewhat, in which case we can discuss better scheduling of confirmation discovery. It may be obviated by what is produced through the examiner and what the examiner reports. So I don’t want to consider that today. With respect to the issue of the shareholders’ meeting, I will continue that to September 7th as well. I think that I need more information as to whether or not that should proceed on a dual track… or a triple track… with the examiner and confirmation process. If I am convinced by the examiner’s report that the process should continue to confirmation without a shareholder meeting I’ll consider that strongly in my decision on the Equity Committee request for that. Do the parties think they can present me with a form of order articulating that?

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