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WMI and WMB Were Distinct Entities With Distinct Assets
4. As this Court recognized early on in these chapter 11 cases, WMI and WMB(together with WMBs respective subsidiaries) were wholly distinct entities and their assets and liabilities are similarly separate. See, e.g., Memorandum Opinion, Youkelsone v. Washington Mutual, Inc. (In re Washington Mutual, Inc.), Adv. No. 09-50039 (MFW) (Bankr. D. Del. Aug. 13, 2010) (Dkt No. 28). Prior to the FDICs seizure of WMBs assets on September 25, 2008, WMI served as a multiple savings and loan holding company for WMB, Washington Mutual Bank fsb and their respective subsidiaries. As reflected in numerous pleadings filed with this Court, even in documents determined by this Court to contain adequate information in accordance with section 1125 of the Bankruptcy Code, WMB and its subsidiaries were the entities in the WaMu Group that were responsible for all aspects of the companys banking processes, including, without limitation, mortgage loan origination and servicing and retail banking processes. In that regard, WMB took applications, ordered appraisals, made underwriting decisions, funded loans, serviced loans, assigned loans to pools and securitized such pooled loans. WMBs subsidiaries were responsible for managing the funding conduit, assigned the conduit loans to securitizations and master-serviced securitizations. WMBs subsidiaries were responsible for managing the funding conduit, assigned the conduit loans to securitizations and master-serviced securitizations. WMI did not participate in any of these banking processes. Consistent with that, WMI and WMB historically reported their assets and liabilities as required by applicable securities laws on both a consolidated and separate basis. See, e.g., WMI Form 10-K, dated March 31, 2008, for the period ending December 31, 2007, a copy of which is annexed hereto as Exhibit A.
5. Unfortunately, Griffin chooses to disregard the separateness of WMI and its subsidiaries and claims that certain assets of WMIs subsidiaries, especially those of WMB which were seized by the FDIC and sold to JPMC, are assets of the Debtors and the Debtors chapter 11 estates. Specifically, Griffin cites to historical consolidated financial information of WMI and of its then-subsidiaries, thereby causing confusion. At times, Griffin even refers to assets that were liquidated or disposed of by WMB or its subsidiaries years prior to the seizure ofWMB and contends that such assets are still the property of WMIs chapter 11 estate. Indicative of these misstatements are Griffins numerous references to MBS (mortgage-backed securities)and safe harbor assets as purportedly belonging to WMI. Worse, these misstatements have created misapprehensions that there are significant recoveries that remain available for distribution to former equity holders upon closure of these chapter 11 cases.
6. As discussed above, any transactions relating to MBS were conducted by WMB and its subsidiaries, and not WMI. The lone residual MBS owned by the Debtors chapter 11 estates on the Petition Date, and, as reflected on WMIs schedule of assets filed early in its chapter 11 case, having a value of $84,000, was liquidated and the proceeds thereof were distributed to Creditors pursuant to the Plan. Griffins references to safe harbor assets, and their ultimate distribution to former equity holders, is more perplexing. First, by definition, such assets are owned by various trusts, with third parties, other than the Debtors, having purchased economic interests in such securitizations. Second, while the FDIC in 2009 acknowledged, see www.federalregister.gov/documents/2009/11/17/...rance-coproration-as, that any properly conducted safe harbor transaction would not have been seized as it constituted a true sale, such FDIC position did not, and will not, generate any value for WMI. Specifically, as such transactions were never conducted by WMI, WMI did not own any interest therein, including, upon information and belief, any residual certificates issued in connection with such transactions. Rather, any such initial interest was confined to the subsidiaries which conducted such transactions. But, even then, as safe harbor transactions, such securitizations and their value were sold by such subsidiaries to third parties and the FDIC has agreed that such value cannot be recovered for the benefit of the Receivership (or, by extension, WMI) from such third-parties.
There Are No Untapped Assets
7. Griffin posits that nothing is impossible and, therefore, someday, somehow, some way, assets will appear that will require distribution to Creditors and, potentially, holders of Preferred Equity Interests and Common Equity Interests. In support of such thesis, Griffin cites the definitions of Causes of Action and Litigation Proceeds from the Plan, but claims that, if any such assets exist, WMILT is not responsible for their collection, negotiation or distribution. Instead, such role should be the responsibility of someone to be appointed, preferably appointed by Retail Equity. See Griffin Objection, fn. 12.
8. Of course, not only is the collection, negotiation and distribution of assets the sole responsibility of WMILT and the Liquidating Trustee in accordance with the provisions of the Plan and the Liquidating Trust Agreement, but, the ongoing suggestion that there are additional assets, yet untapped, is belied by the very facts of these cases, the statements made by the Equity Committee in connection with solicitation and confirmation of the Plan and the efforts of the Litigation Subcommittee and the Trust to litigate and collect on all available Causes of Action. In that regard, as part of the solicitation process to the Plan, the Court approved the form of a letter, a copy of which is annexed hereto as Exhibit B, prepared by the Equity Committee to be distributed to holders of Preferred Equity Interests and Common Equity Interests in conjunction with other solicitation materials. Such letter in support discusses many of the same issues that continue to be raised by Griffin in the Griffin Objection, the Griffin Appeal and even the recently denied Withdrawal Motion. It mentions the future role of the Litigation Subcommittee (represented by counsel to the Equity Committee) and the representation of retail equity serving on the Trust Advisory Board. It references the claims and causes of action that will be pursued for the benefit of holders of Liquidating Trust Interests.
9. As the Court is well aware, through having presided over these chapter 11 cases, but also, through the regularly-filed Quarterly Summary Reports, the Debtors and the Trust commenced numerous adversary proceedings to recover avoidable transfers, including manyactions against former officers and employees of the Debtors. Each of these actions has been resolved and, as evidenced by the Pacer update as of December 12, 2019, a copy of which is annexed hereto as Exhibit C, has been closed. Indeed, the Griffin Objection acknowledges the absence of any pending litigation.
10. Similarly, other claims and causes of actions investigated and pursued by the Litigation Subcommittee, including against former officers and directors, were successfully resolved, with significant recoveries having been generated for the Debtors estates. Thereafter, the Litigation Subcommittee determined, after investigation, that no additional actions were worthy of pursuit.
11. Based upon all of such efforts, WMILT has determined, in its business judgment, that there are no additional Causes of Action or Litigation Proceeds available to the Trust..."
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