Here is what is going to happen Step 1- So called Global Settlement- It is not

Here is what is going to happen
Step 1- So called Global Settlement- It is not Global but will deal with the $4 billion deposit, $6 billion IRS refund and with the Series R “exchange event”. This will have the net effect of having Cash in the estate of close to $8 to 9 billion. The estate will also have claims that will need to be converted to cash at some point. Hopefully, we will hear by Friday, March 12th.
Step 2-Plan of Reorganization(POR)- This will be the filing of the POR on March 26th. I fully expect a delay, even though this date is the last day under the so called 18 month rule. The conversation for the delay will be simple, something like… “bk law of 18 months was not designed for a complex case like WMI”. Delay will be granted.
The POR, once filed will have 4 elements:
a) The secured, unsecured, and H’s will be paid out in cash, leaving around $1 billion of cash in the estate plus the claims.
b) All of the $1 billion in cash, except for $50 million, see below, will be distributed to the Preferreds, representing 50% of Preferred Face Value. The remaining 50% of Preferred Face Value will be dealt with below.
c) The Existing Commons will be cancelled and a NEW COMMON will be issued.
The NEW COMMON will be exchanged from the Remaining Preferred Face Value of 50%, and the OLD Commons. This Exchange Ratio will be heavily argued and negotiated, but in the end, the Preferred will end up with the Vast Majority of the Common ownership and the rights to the claims that are not cash yet. I am guessing at least 90%. The OLD Commons will be severely diluted.
d) The $50 million (or an amount of cash necessary to litigate for 2-3 years will be retained in the estate) will be used to pay fees for the “great expedition to turn claims into cash” which could take another 2 to 3 years. In the end, there would be a very low probability that there would be any distribution to the NEW COMMONS from this, or at least, the probability will be extremely low. As a side note, watch for the pre-seizure commons filing a class action to get their share of this so called “value”.

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