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UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

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:

In re

: Chapter 11:

WASHINGTON MUTUAL, INC., et al.,1 : Case No. 08-12229 (MFW)

:

:

Debtors. : (Jointly Administered)

:

: Hearing Date: Feb. 16, 2012 at 9:30 a.m. ET

---------------------------------------------------------------x

DEBTORS OMNIBUS RESPONSE TO

OBJECTIONS TO CONFIRMATION OF THE SEVENTH

AMENDED JOINT PLAN OF AFFILIATED DEBTORS PURSUANT

TO CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE

Washington Mutual, Inc. (WMI) and WMI Investment Corp., as debtors and

debtors in possession (together, the Debtors), as and for their omnibus response (the Omnibus

Response) to the objections interposed to confirmation of the Seventh Amended Joint Plan of

Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, dated

December 12, 2011 (as it has and may be further amended, the Plan),2 respectfully represent:

Preliminary Statement

1. The majority of stakeholders in these Chapter 11 Cases have resoundinglyvoted in favor of confirmation of the Plan. As the Debtors will demonstrate at the Confirmation

Hearing, and as evidenced by the declarations filed contemporaneously herewith, the Plan

unequivocally satisfies all the requirements for confirmation set forth in chapter 11 of the

Bankruptcy Code. Upon confirmation of the Plan, the Debtors will be poised to make

1 The Debtors in these chapter 11 cases along with the last four digits of each Debtors federal tax identificationnumber are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395). The Debtors principaloffices are located at 1201 Third Avenue, Suite 3000, Seattle, Washington 98101.

2 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.

0812229120213000000000027

Docket #9663 Date Filed: 2/13/2


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distributions of billions of dollars and securities valued in hundreds of millions of dollars to

holders of Claims and Equity Interests.

2. Certain parties, however, seek to once again derail confirmation for theirown gain, and at the expense of all other stakeholders. Specifically, the Consortium of Trust

Preferred Securities (the TPS Consortium), together with its affiliate, the so-called TPS Group

(collectively, the TPS Family),3 have recycled and repackaged many of their prior

objectionswhich the Bankruptcy Court already has overruled in the January Opinion, the

September Opinion and miscellaneous other ordersinto their baseless objections to

confirmation of the Plan.

3. In its objection, the TPS Consortium asks the Bankruptcy Court to re-reconsider its prior rulings on multiple issues and argues, among other theories, that the

Bankruptcy Court has no jurisdiction to consider confirmation of the Plan, that the proposed

consensual third party releases in the Plan are impermissible, and that the proposed treatment of

holders of REIT Series is unfair. Similarly, the TPS Group asserts that the global understanding

in the Plan among the Debtors, the Equity Committee, AAOC and others, and, according to the

results of the solicitation to the Plan, something acceptable to virtually all parties but the TPS

Family, is unreasonable, that the Plan improperly releases the Debtors claims against AAOC,

and that the requested vacatur in the Plan is not allowable. Not comfortable with the Bankruptcy

Courts ruling and the similar rebuff of the United States District Court for the District of

Delaware (the District Court), the TPS Family has engaged in pre-Confirmation Hearing

skirmishing and taken its arguments to the United States Court of Appeals for the Third Circuit

(the Third Circuit). On February 10, 2012, the Third Circuit similarly denied all of the TPS

3 But for one member of the TPS Consortium who has refused to enlist with the TPS Group, the membership of boththe TPS Consortium and the TPS Group are identical.


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Familys ploys and delivered the TPS Family back to the Bankruptcy Court with the clear

admonishment to proceed with the Confirmation Hearing. A copy of the Third Circuits

summary rejection is annexed hereto as Exhibit A. As such, the Debtors and all parties in

interest are ready for the Bankruptcy Courts consideration of confirmation of the Plan.

4. For the reasons set forth herein, in the annexed chart and in theMemorandum of Law in Support of Confirmation of the Seventh Amended Joint Plan of Affiliated

Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (the Confirmation

Memorandum), filed contemporaneously herewith, all objections to confirmation of the Plan

should be overruled.

Background

5. On September 26, 2008, each of the Debtors commenced with theBankruptcy Court a voluntary case pursuant to chapter 11 of the Bankruptcy Code. As of the

date hereof, the Debtors continue to operate their businesses and manage their properties as

debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

6. On October 3, 2008, the Bankruptcy Court entered an order pursuant toBankruptcy Rule 1015(b) authorizing the joint administration of the Debtors Chapter 11 Cases.

On October 15, 2008, the United States Trustee for the District of Delaware (the U.S. Trustee)

appointed the Creditors Committee. On January 11, 2010, the U.S. Trustee appointed the

Equity Committee.


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The September Opinion

7. On September 13, 2011, the Bankruptcy Court entered the SeptemberOpinion [D.I. 8612] and the September Order [D.I. 8613] (i) determining that the Bankruptcy

Court has jurisdiction to confirm and approve the Global Settlement Agreement (as defined in

the Modified Plan), (ii) reaffirming its conclusion that the Global Settlement Agreement and the

transactions contemplated therein are fair, reasonable, and in the best interests of the Debtors, the

Debtors creditors, and the Debtors chapter 11 estates, (iii) finding that the Modified Plan was

proposed in good faith, and (iv) identifying certain modifications in the Modified Plan that, if

incorporated, would render the plan confirmable under the requirements of the Bankruptcy Code.

8. Additionally, the Bankruptcy Court denied the Standing Motion withrespect to the prosecution of equitable subordination claims, but, with respect to claims for

equitable disallowance, granted the Standing Motion, staying all proceedings related to the

Standing Motion, however, pending mediation.

The Mediation

9. On October 6, 2011, the Bankruptcy Court directed the Debtors andcertain other parties in interest to mediation (the Mediation). By order, dated October 10, 2011

[D.I. 8780] (the Mediation Order), the Bankruptcy Court appointed Judge Raymond T. Lyons

of the United States Bankruptcy Court for the District of New Jersey as mediator (the

Mediator). As set forth in the Mediation Order, the following parties were eligible to

participate in Mediation: the Debtors, the Creditors Committee, the Equity Committee, AAOC,

the TPS Consortium, the TPS Group, the WMB Noteholders, Normandy Hill Capital L.P., and

Bank of New York Mellon Trust Company. In addition, the Mediation Order authorized the


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Mediator to consider and take appropriate action with respect to any matters the Mediator

deems appropriate in order to conduct the Mediation, consistent with the terms of such order.

10. The Mediation commenced on October 19, 2011. At status conferencesheld on November 7, 2011, and on December 8, 2011, the Bankruptcy Court granted the

Mediators request for additional time to continue the Mediation.4 As a result of the Mediation,

and with the assistance of the Mediator, discussions among the Debtors, the Creditors

Committee, the Equity Committee, and certain other creditor constituencies culminated in certain

modifications to the Modified Plan, which modifications are embodied in the Plan.

11.

It must be noted that the Mediator has continued to provide invaluable

assistance in these Chapter 11 Cases. In that regard, the Mediator has been available at all times

since his appointment up to and including the date hereof, has provided guidance to address a

multitude of issues, both broad and granular, and continues to attempt to resolve outstanding

objections to confirmation of the Plan.

The Plan and the Disclosure Statement

12. On December 12, 2011, the Debtors filed the Plan and the DisclosureStatement [D.I. 9179]. The Plan is premised on the Global Settlement Agreement and makes

certain changes to the Modified Plan, consistent with the September Opinion and the

negotiations between the Debtors, the Creditors Committee, the Equity Committee, and other

Creditor constituencies during the Mediation.

13. On December 12, 2011, the Debtors filed theMotion of Debtors for anOrder, Pursuant to Sections 105, 502, 1125, 1126, and 1128 of the Bankruptcy Code and

4 At each of these hearings, the TPS Consortium complained that its members were not allowed to participate in theMediation, but the Bankruptcy Court disregarded such complaints and ordered the Mediation to continue as theMediator deemed appropriate. See Hrg Tr. 11/7/2011 16:5-6, 16:14-17:5; Hrg Tr. 12/8/2011 16:23-17:6, 18:13-14.


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Bankruptcy Rules 2002, 3003, 3017, 3018, 3019, 3020, and 9006, (I) Approving the Proposed

Disclosure Statement and the Form and Manner of the Notice of the Proposed Disclosure

Statement Hearing, (II) Establishing Solicitation and Voting Procedures, (III) Scheduling A

Confirmation Hearing, and (IV) Establishing Notice and Objection Procedures for Confirmation

of the Debtors Seventh Amended Plan [D.I. 9181] (the Disclosure Statement Motion), in

which the Debtors requested, among other things, entry of an order approving the Disclosure

Statement and establishing solicitation and voting procedures in connection with the Plan.

14. On January 11, 2012, the Bankruptcy Court held a hearing (theDisclosure Statement Hearing) to consider, among other things, the Disclosure Statement

Motion and certain motions filed by the TPS Consortium seeking (i) a stay pending appeal of the

Bankruptcy Courts ruling in an adversary proceeding commenced by the TPS Consortium, and

(ii) separate classification of the REIT Series from all other Preferred Equity Interests. See

Motion of the Consortium of Trust Preferred Security Holders for Stay of Confirmation

Proceedings Pending Appeal, dated December 23, 2011 [D.I. 9260];Motion of the Consortium

of Trust Preferred Security Holders to Determine Propriety of Proposed Classification of

Interests Subject to Treatment Under Class 19 of the Seventh Amended Plan of Liquidation,

dated December 23, 2011 [D.I. 9257]. Following the Disclosure Statement Hearing, the

Bankruptcy Court entered separate orders denying each of the motions filed by the TPS

Consortium. See Order Denying the Motion of The Consortium of Trust Preferred Security

Holder for Stay of Confirmation Proceedings Pending Appeal, entered January 11, 2012

[D.I. 9397]; Order Denying Motion of the Consortium of Trust Preferred Security Holders to

Determine Propriety of Proposed Classification of Interests Subject to Treatment Under Class

19 of the Seventh Amended Plan of Liquidation, entered January 11, 2012 [D.I. 9398].


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15. On January 11, 2012, the Bankruptcy Court entered an order [D.I. 9414](the Disclosure Statement Order) granting the Disclosure Statement Motion, including, without

limitation, approving the adequacy of the information contained in the Disclosure Statement in

accordance with section 1125 of the Bankruptcy Code, and (i) establishing certain solicitation

and voting procedures with respect to the Plan (the Solicitation Procedures); (ii) establishing

February 7, 2012 as the deadline to file objections to confirmation of the Plan (the Objection

Deadline); and (iii) scheduling the Confirmation Hearing to commence on February 16, 2012.

In addition, with respect to Disclosure Statement Objections, the Bankruptcy Court expressly

ruled that:

All Objections, responses to, and statements and comments, ifany, in opposition to the Proposed Disclosure Statement, otherthan those withdrawn in their entirety prior to, or on the record at,the Hearing, shall be, and hereby are, overruled in their entiretyfor the reasons stated on the record and, notwithstanding theforegoing, no Objection shall be considered an objection toconfirmation of the Plan unless such objection is interposed inaccordance with the procedures for objecting to confirmation ofthe Plan set forth herein.

Disclosure Statement Order at 3.

Omnibus Response to Objections

16. Following the entry of the Disclosure Statement Order, certain partieshave interposed objections to confirmation of the Plan (the Objections). Attached hereto as

Exhibit B is a chart summarizing the Objections filed on or prior to the Objection Deadline,

and the Debtors responses thereto (the Omnibus Response Chart).5 For the reasons stated

5 Certain pro se parties filed Objections (the Pro Se Objections). The Omnibus Response Chart includes theDebtors responses to the non-duplicative Pro Se Objections. A list of the docket numbers corresponding to each ofthe Pro Se Objections (if available) is annexed to the Omnibus Response Chart as Exhibit 1.


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below, in the Omnibus Response Chart and in the Confirmation Memorandum, the Objections

should be overruled in their entirety.6

17. As noted above, the TPS Family has recycled their already-deniedobjections in order to make, as it acknowledges in pleadings to, among others, the Third Circuit,

a complete record for its threatened appeal. Because of the repetitious and unfortunately

voluminous nature of such objections, the Debtors address them herein.

Objections of the TPS Consortium

18. The TPS Consortium asserts in its Objection (the TPS ConsortiumObjection),

7

among other things, that (i) the Plan contains non-consensual third party release

provisions that violate sections 524(e) and 1123(a)(4) of the Bankruptcy Code; (ii) the Plan

violates the cram down requirements of section 1129(b)(2)(C) of the Bankruptcy Code;

(iii) the special distributions from JPMC to certain holders of REIT Series violate

section 1123(a)(4) of the Bankruptcy Code; and (iv) holders of preferred equity interests should

have selected the management of the Reorganized Debtors. Each of these objections fails and

should be denied.8

6 Failure of the Debtors to address other assertions made in the Objections does not constitute a waiver of theDebtors rights to object to such assertions at the Confirmation Hearing. The Debtors deny many of the factual andlegal assertions and characterizations contained in the Objections. Nothing contained herein shall be deemed anadmission or acceptance of any statement contained in the Objections.

7 In its Objection, the TPS Consortium incorporates by reference all of its previous pleadings. To the extent that theBankruptcy Court has not already overruled or disregarded any of the objections asserted by the TPS Consortium inthe foregoing pleadings, the Debtors incorporate by reference herein the Debtors responses to such objections intheir previously-filed responsive pleadings and reserve the right to further object to such objections at theConfirmation Hearing.

8 The TPS Consortium also continues and reasserts certain other objections in a bullet list, see TPS Objection at 41, which objections are addressed in the Omnibus Response Chart.


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The Releases Set Forth in the Plan are Consensual and Permissible

19. The third party release provisions set forth in the Plan are consistent withthe Bankruptcy Code and the prior rulings of the Bankruptcy Court. See September Opinion at

99; see also Confirmation Memorandum at 44-45, 68-69. Notwithstanding that, in accordance

with the January Opinion, to be effective, the releases set forth in the Plan require affirmative

consent, the TPS Consortium contends that the releases are non-consensual. See TPS

Consortium Objection at 9. To further its contention, the TPS Consortium has conjured an

illogical fallacy by which it converts the releases in the Plan from consensual to non-consensual.

Specifically, the TPS Consortium asserts that, because the Plan conditions the receipt of

distributions upon thegrant of releases, the releases are coercive and, therefore, non-consensual.

See TPS Consortium Objection at 12. Building on its fallacious argument, the TPS

Consortium further asserts that the releases in the Plan fail to meet the standard for approving

non-consensual releases.

20. As the Bankruptcy Court affirmed in the September Opinion, granting arelease is purely voluntary. A preferred shareholder who does not wish to give a release does not

have to, but will be foregoing any distribution. September Opinion at 99. Section 41.3 of the

Plan plainly excludes parties that have not affirmatively granted the proposed releases in Section

41.6 of the Plan. See Plan, 41.3 (Except as otherwise expressly provided in Sections 41.6 and

41.12 of the Plan . . . .). A stakeholderincluding a holder of Preferred Equity Intereststhat

does not elect to grant the releases in Section 41.6 of the Plan and does not receive a distribution,

is not bound by such releases. Because the releases are consensual, the standard for approval of

non-consensual releases is wholly inapplicable here. Rather, in accordance with the prior rulings

of the Bankruptcy Court, approval of the consensual third party releases in the Plan is warranted.


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See September Opinion at 99-100; January Opinion at 75-77, 83-84; In re Coram Healthcare

Corp., 315 B.R. 321, 336 (Bankr. D. Del. 2004) (stating that a plan is a contract that may bind

those who vote in favor of it. . . . [T]o the extent creditors or shareholders voted in favor of [the

Plan], which provides for the release of claims they may have against Noteholders, they are

bound by that.);In re Zenith Elecs. Corp., 241 B.R. 92, 111 (Bankr. D. Del. 1999) (approving

non-debtor releases for creditors that voted in favor of plan); U.S. Bank Natl Assn v.

Wilmington Trust Co. (In re Spansion), 426 B.R. 114, 144 (Bankr. D. Del. 2010) (recognizing

that courts have determined that a third party release may be included in a plan if the release is

consensual); see also Confirmation Memorandum at 44-45.

21. It should be noted that each member of the TPS Family has chosen to notonly vote to reject confirmation of the Plan, but also opted to not provide a release pursuant to

Section 41.6 of the Plan.9 As such, each member of the TPS Family has exercised its discretion

and determined to forego its economic interests in the Debtors estates. Moreover, each member

of the TPS Family has affixed to its ballot an addendum (the Addendum), a copy of which is

annexed hereto as Exhibit C. Pursuant to the Addendum, the TPS Family again challenges the

Bankruptcy Courts decision in the TPS Action (as defined in the Disclosure Statement) and lays

claim to the securities which were automatically exchanged. In doing so, they purport to be

voting in protest, alleging that they are not truly part of the Chapter 11 Cases.

9 Of the $4 billion in REIT Series face amount currently outstanding, holders of REIT Series in the amount ofapproximately $3,597,000,000 returned Ballots, and, within such group, holders of REIT Series in the amount ofapproximately $1,822,000,000 have elected not to grant the releases set forth in the Plan. See Sharp Decl. at Exs. A,C. Notably, in its most recent verification statement, counsel for the TPS Consortium states that its memberscollectively hold REIT Series Preferred Shares in the amount of approximately $1,547,000,000. See Verified Fifth

Amended Statement of Brown Rudnick LLP and Campbell & Levine LLC Pursuant to Rule 2019 of the Federal

Rules of Bankruptcy Procedure, dated January 11, 2012 [D.I. 9384].


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The Plan Does Not Unfairly Discriminate Against the Holders of the REIT Series

22. Contrary to the assertion of the TPS Consortium, the treatment of allPreferred Equity Interests, including the REIT Series, is consistent with the requirements of

section 1123(a)(4) of the Bankruptcy Code. The TPS Consortium alleges that the Plan violates

section 1123(a)(4) because:

the members of the TPS Consortium hold unique (to holders ofthe REIT Series) direct claims against the Debtors and JPMorganrelated to the Trust Preferred Securities and the purportedexchange thereof, which they would be forced to surrender inexchange for the same percentage of recovery as other Class 19members who do not hold such a claim (i.e., the holders of the

Series K and Series R).

TPS Objection at 18. The TPS Consortiumwhich rejected the special distribution that JPMC

previously offeredalso contends that such distributions provide unfair treatment under

section 1123(a)(4). See TPS Objection at 29-30, 30 n.17. Neither of these objections can

survive given the rulings of the Bankruptcy Court and applicable legal precedent.

23. First, the Bankruptcy Court and all parties in interest have heard the TPSConsortiums unique claim argument many times and, each time, it has been rejected. The

Bankruptcy Court has expressly determined that the holders of REIT Series do not possess

unique rights.10 See Hrg Tr. 1/11/2012 94:3-11 (determining that holders of REIT Series have

the exact same rights as other holders of Preferred Equity Interests, and are not entitled to

separate classification); see also September Opinion at 4 (By separate Opinion and Order, the

[Bankruptcy] Court found that certain purported holders of the Trust Preferred Securities . . . no

longer had any interest in the TPS because their interests had been converted to interests in

10 The TPS Consortium reasserts, this time in a footnote, its erroneous belief that the purportedly unique rights ofholders of REIT Series make classification of the REIT Series with the Series K and Series R . . . inappropriate.TPS Objection at 18 n.11 (citing its prior motion for reclassification). As noted herein, the Bankruptcy Courtalready rejected the TPS Consortiums argument that it possesses unique claims and its belief that it is entitled toseparate classification.


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preferred stock of WMI. (emphasis added)). Moreover, the Bankruptcy Court already

determined that, although certain members of a class may elect not to grant the releases in a plan

in order to pursue whatever claims they may have, providing different treatment based upon

conditional releases does not violate section 1123(a)(4) of the Bankruptcy Code. See January

Opinion at 85. As the Bankruptcy Court expressly ruled:

Providing different treatment to a creditor who agrees to settle

instead of litigating is permitted by section 1123(a)(4) . . . Whatis important is that each claimant within a class have the sameopportunity to receive equal treatment . . . That is the case here.Therefore, the Court concludes that this provision of the Plandoes not violate section 1123(a)(4).

Id. at 85-86 (emphasis added) (citing In re Dow Corning Corp., 255 B.R. 445, 472 (E.D. Mich.

2000); In re Dana Corp., 412 B.R. 53, 62 (S.D.N.Y. 2008)). See also In re Resorts Intl, Inc.,

145 B.R. 412, 448 (Bankr. D.N.J. 1990) (noting that section 1123(a)(4) does not require that all

class members be treated precisely the same in all respects, but there must be an approximate

measure of equality). Here, the Plan provides all members of Class 19 with an equal

opportunity: each member can elect to grant the releases set forth in the Plan and receive a

distribution, or decline to grant the releases and retain whatever claims such member may have.

Accordingly, the proposed releases do not provide unfair treatment.

24. The TPS Consortium argues, however, that the Bankruptcy Court mustreconsider its prior ruling,11 and find that the Plan provides for unfair treatment of holders of the

11

The Bankruptcy Court should deny the request of the TPS Consortium to reconsider its ruling regarding theapplicability of two cases the Bankruptcy Court already has found distinguishable. See TPS Consortium Objection 21 (asking the Bankruptcy Court to reconsider its determination that AOV and Conseco are distinguishable.). Inthe January Opinion, the Bankruptcy Court properly concluded that, under section 1123(a)(4), the relevant inquiry iswhether each claimant or interest holder within a class has the same opportunity to receive equal treatment. SeeJanuary Opinion at 85-86 (citing Dow Corning). Although the TPS Consortium relies heavily upon the unfairtreatment ruling in In re AOV Indus., Inc., 792 F.2d 1140 (D.C. Cir. 1986), the Bankruptcy Court, like other courts,should expressly reject that decision because of the significant flaws in AOVs reasoning. In re Dow Corning,244 B.R. 634, 668 (Bankr. E.D. Mich. 1999) (Dow Corning I). In fact, the bankruptcy court in Dow Corning Ilaid out several reasons why the AOV ruling should not be followed, including, among others, that such ruling


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REIT Series because such holders are forced to relinquish unique rights. The TPS Consortium

specifically contends that, unlike other holders of Preferred Equity Interests in Class 19, holders

of the REIT Series must release their unique claims in order to receive the same recovery as

other class members.12 TPS Consortium Objection at 18. As explained above, the Bankruptcy

Court already has indicated that holders of REIT Series do not possess any rights in the Trust

Preferred Securities and, therefore, do not possess unique claims. Moreover, each holder of

REIT Series, like all other holders of Preferred Equity Interests, has the option to elect to grant a

release of its claims and receive a distribution. Accordingly, the Plan does not provide unfair

treatment.

25. Second, the TPS Consortiums allegation that the special distributionsfrom JPMC provide unfair treatment under section 1123(a)(4) of the Bankruptcy Code is invalid

on its face because special distributions of funds that do not belong to the Debtors estates are

not subject to the requirements of section 1123(a)(4). Here, JPMC, and JPMC alone, is funding

the special distribution to certain holders of REIT Seriessuch funds are notpart of the Debtors

(i) disregards the express language of section 1123(a)(4), (ii) would render the construction of convenience classesimpossible, which would be bad public policy and contrary to the Bankruptcy Code, and (iii) sets forth a test ofsuch impractical rigidity that it will be unworkable any time there is a class containing disputed and unliquidatedclaims. Id. at 667-69; see also Dow Corning, 255 B.R. at 445 (agreeing with the [b]ankruptcy [c]ourts conclusionthat the reasoning in [ ] AOVregarding equal treatment within a class should be rejected).

12 To prop up its specious argument, the TPS Consortium cites decisions that provide scant support because suchcases are wholly off-point. See, e.g., TPS Consortium Objection at 17 (citing Finova Grp., Inc. v. BNP Paribas (Inre Finova Grp., Inc.), 304 B.R. 630, 636 (D. Del. 2004) (ruling that, under a plan that distributed interest to membersof a class, it was appropriate to pay some but not all members additional utilization fees because others hadincluded those fees as a component of their interest rates, and stating that [t]he requirements of Section 1123 do notrequire the parties to receive equal payment, and the Court does not read the Bankruptcy Courts ruling to require

equal payment.); In re Modern Steel Treating Co., 130 B.R. 60, 64 (Bankr. N.D. Ill. 1991) (ruling that unequaltreatment would occur if one shareholder in a class obtained the shares owned by certain other equity holders in thesame class without any consideration)). Moreover, the ruling in In re W.R. Grace & Co. in no way bolsters the TPSConsortiums argument because, in that decision, the court rejected the assertion by one creditor that it held uniqueclaims and therefore was providing more consideration than other members of its class. See In re W.R. Grace &Co., No. 11-199, 2012 WL 310815, at *55 (D. Del. Jan. 30, 2012). Additionally, the Grace court expressly statedthat perfect or precise equality is not requiredonly approximate equality. Id. at 47. Here, all holders of EquityInterests in Class 19 are receiving the same treatment: the opportunity to receive a distribution in exchange forwhatever claims they may have. Consistent with the January Opinion, such treatment satisfies section 1123(a)(4) ofthe Bankruptcy Code.


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estates. See Hrg Tr. 3/21/2011 55:14-19 (explaining that the special distribution is a payment

that [JPMC] was making, its not coming from the [D]ebtors). Certain holders of the REIT

Seriesincluding the TPS Consortiumelected not to participate in the special distribution

from JPMC, and to pursue litigation against JPMC instead. The TPS Consortium failed to

prevail in its litigation. Presumably, now (and as evidenced by its efforts at the hearing to

consider the disclosure statement with respect to the Modified Plan) it seeks to receive a portion

of the special distribution provided by JPMC. JPMC has declined to re-offer the special

distribution to any holders of REIT Series that failed to agree to the conditions for the special

distribution. See id. at 55:23-24. Consequently, by electing to pursue litigation with JPMC, and

voting against the Sixth Amended Plan (as defined in the Disclosure Statement), the TPS

Consortium has foreclosed its ability to receive a special distribution from JPMC. See Hrg Tr.

3/21/2011 56:12-14. Although certain holders of REIT Series will receive a special distribution

from JPMC, and not the Debtors estates, such payment does not constitute unfair treatment.

Rather, the Plan provides equal treatment consistent with the requirements of section 1123(a)(4)

of the Bankruptcy Code, and the prior rulings of the Bankruptcy Court, and merely facilitates the

distribution of additional consideration.

The Bankruptcy Code Requirements for Cram Down are Satisfied

26. The Plan complies with the cram down requirements set forth in theBankruptcy Code. See Confirmation Memorandum at 79-86. With respect to the cram down of

equity interests, section 1129(b)(2) provides, among other things, that:

(2) For the purpose of this subsection, the condition that a plan befair and equitable with respect to a class includes the followingrequirements:

***

(C) With respect to a class of interests


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(i) the plan provides that each holder of an interest of such classreceive or retain on account of such interest property of a value,as of the effective date of the plan, equal to the greatest of theallowed amount of any fixed liquidation preference to which suchholder is entitled, any fixed redemption price to which such

holder is entitled, or the value of such interest; or

(ii) the holder of any interest that is junior to the interests of suchclass will not receive or retain under the plan on account of suchjunior interest any property.

11 U.S.C. 1129(b)(2). The Plan properly provides for the distribution of value to holders of

Equity Interests in accordance with section 1129(b)(2) of the Bankruptcy Code. See

Confirmation Memorandum at 79-86. The TPS Consortium contends, however, that the Plan is

not confirmable because it provides for distributions to Class 21 and Class 22. The TPS

Consortiums argument fails.

27. First, the proposed treatment of Dime Warrants in Class 21 accords withthe terms of the settlement among the Debtors and the class representatives for the holders of

Dime Warrants, embodied in that certain Stipulation and Agreement Between the Debtors and

Class Representatives of the LTW Holders Resolving Adversary Proceeding and the LTW Proofs

of Claim, dated January 11, 2012 (the Dime Warrant Stipulation), which the Bankruptcy Court

already has approved by order, entered February 13, 2012 [D.I. 9649], and to which the TPS

Consortium did not object. Specifically, the Allowed Claims of holders of Dime Warrants are

claims within Classes 12 ($9 million), 18 ($10 million) and 22 (8.77% of the Reorganized

Common Stock distributed to holders of Common Equity Interests). As such, there is no

distribution being made within Class 21 itself.

28. Second, equitable considerations dictate that the Bankruptcy Court shouldapprove the proposed allocation of Reorganized Common Stock. As discussed more fully in the

Confirmation Memorandum, Class 19 only narrowly voted to reject the Plan. See Confirmation


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Memorandum at 83. In fact, the percentage of the Class voting to accept is only slightly less

than the two-thirds required under the Bankruptcy Code. As noted above, a very large

percentage of the votes to reject, and an even larger percentage of the elections to opt out of

granting the releases, were cast by members of the TPS Consortium. See supra note 9. With

respect to their interests in Class 19, the Debtors believe that the members of the TPS

Consortium voted against the Plan andopted out of the non-debtor releases contained in Section

41.6 of the Plan. Consequently, it is clear that the TPS Consortium members have waived any

economic interest in the Debtors estates and, it raises the question as to whether their solicitation

responses have been tendered in good faith, notwithstanding the equities of these Chapter 11

Cases (or the fact that the TPS Family purchased their respective interests in the secondary

market for cents-on-the-dollar). Thus, the Debtors reserve the right to designate the Class 19

votes of the TPS Consortium and the TPS Group.

29. Lastly, even if the proposed allocation set forth in the Plan were notadopted by the Bankruptcy Court, consistent with the requirements of the Bankruptcy Code, the

Plan provides for the allocation of Reorganized Common Stock to Classes junior to Class 19

subject to the discretion of the Bankruptcy Court. See Plan, 24.1, 25.1. In other words, the

Plan contemplates that holders of Preferred Equity Interests in Class 19 may receive all

distributions made on account of Equity Interests. On the other hand, the Bankruptcy Court may

exercise its judgment, in light of the foregoing equitable considerations, and approve the

proposed allocation. In any event, the terms of the Plan, as approved by the Bankruptcy Court,

are fair and equitable with respect to all Classes and, therefore, should be confirmed.


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Proposed Governance of the Reorganized Debtors Satisfies the Bankruptcy Code

30. The proposed governance of the Reorganized Debtors, Trust AdvisoryBoard and the Litigation Subcommittee is consistent with the requirements of section 1129(a)(5)

of the Bankruptcy Code. See Confirmation Memorandum at 61-64. Additionally, the

establishment and composition of the foregoing governance entities reflect the understanding

reached as a result of the negotiations amongst the Debtors, the Debtors, the Creditors

Committee, the Equity Committee, AAOC and certain other stakeholders. The TPS Consortium

claims, however, that:

holders of preferred equity should be allowed to choose thosewho would serve on the [Reorganized Debtors] board, the TrustAdvisory Board and the Litigation Subcommittee. To do sowould be consistent with the requirement that post-emergencegovernance reflect the interests of those who have an economicstake in the enterprise.

TPS Objection at 31-35. According to the TPS Consortium, the nominees of the Equity

Committee are not a substitute or proxy for the ability of preferred equity interests to select

board members.

31. The TPS Consortiums allegation that the Equity Committee is not suitedto represent all holders of Equity Interests rings hollow. The Bankruptcy Court has previously

ruled that the Equity Committee adequately represents the interests of holders of both Preferred

Equity Interests and Common Equity Interests. See Hrg Tr. 1/28/2010 60:12-14 (finding that,

under this case . . . theres certainly sufficient representation of the preferreds on the existing

Equity Committee); see also Order Denying (I) Debtors Motion for an Order Disbanding the

Official Committee of Equity Holders Appointed by the United States Trustee and (II) Black

Horses Motion to Reconstitute the Equity Committee, entered February 8, 2010 [D.I. 2378].

Indeed, at every turn, in every discussion, the Equity Committee has steadfastly asserted the


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rights and interests of holders ofall Equity Interests.13 Therefore, the Equity Committee is the

proper fiduciary to select representatives on behalf of Equity Interests holders, including holders

of Preferred Equity Interests and Common Equity Interests alike. To the extent that the TPS

Consortium disputes the validity of the particular nominees selected by the Equity Committee,

the TPS Consortium should raise such concerns with the Equity Committee and not as an

objection to confirmation of the Plan.

32. Moreover, the individuals selected by the Equity Committee for the TrustAdvisory Board not only represent the interests of all Equity Interest holders, but also are

qualified to oversee the Liquidating Trust. The Equity Committee has selected Michael

Willingham, the current chair of the Equity Committee, who has zealously advocated for all

Equity Interests throughout these cases, to continue to represent such interests on the Trust

Advisory Board. The Honorable Douglas Southard, a former California state court judge and a

Preferred Equity Interest holder, clearly represents the interests of such holders. Moreover, each

member of the Trust Advisory Board shall have a fiduciary duty to act in the best interests of the

Liquidating Trust Beneficiaries, including, without limitation, the holders of Preferred Equity

Interests. Thus, each of the individuals selected by the Equity Committee is fully qualified to

represent the interests of all Preferred Equity Interest holders and serve on the Trust Advisory

Board.

33. Likewise, the Equity Committees appointees to the board of directors forthe Reorganized Debtors will represent the interests of all holders of Reorganized Common

Stock. Together, the directors selected by the Equity Committee have considerable business

management experience in multiple disciplines, including, among other areas, finance and

accounting, governance, and mergers and acquisitions. See Plan Supplement, Ex. E.

13 Notably, a majority of the members of the Equity Committee are holders of Preferred Equity Interests.


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Additionally, as members of the board of directors, each of the individual appointed by the

Equity Committee will have a duty to maximize the value of Reorganized Common Stock for the

benefit of the holders thereof, including, among others, the current holders of Preferred Equity

Interests. Accordingly, there can be no dispute that interests of holders of Preferred Equity

Interests are adequately represented by the directors selected by the Equity Committee.

Moreover, because the members of the TPS Consortium have voluntarily foregone their

distributions of Reorganized Common Stock, they lack standing to object to the governance of

the Reorganized Debtors or the composition of its board.

Objections of the TPS Group

34. The Objection of the TPS Group (the TPS Group Objection) rests ontwo patently false premises: (i) the global understanding among AAOC, the Debtors, the

Creditors Committee and the Equity Committee that compromises, among other things, claims

against AAOC, is not fair and reasonable because the Debtors and the Equity Committee are

unsure of the claims being compromised, and (ii) AAOC provides no consideration for the

understanding. Contrary to the TPS Groups assertion, the Debtors have repeatedly stated in

their filings that they believe these claims provide no value to the Debtors estates. See, e.g.,

Debtors Objection to Motion for an Order Authorizing the Official Committee of Equity

Security Holders to Commence and Prosecute Certain Claims of Debtors Estates, dated

August 10, 2011 [D.I. 8424]. Indeed, it is for this very reason that the Equity Committee filed

the Standing Motion and the Bankruptcy Court even considered it. Conversely, the Equity

Committee has stated that it believes such claims could be worth up to $2 billion, assuming all

claims by AAOC are disallowed. In response to these widely varying positions, the Bankruptcy

Court directed certain parties to participate in the Mediation to, among other things, explore a


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the Mediation. Among other things, the resolution (i) releases the claims asserted by the

Standing Motion against AAOC in exchange for certain consideration, including, inter alia,

subject to the Reorganized Debtors right to seek financing on better terms, a $125,000,000

credit facility for the Reorganized Debtors, and the agreement to backstop the Runoff Notes

election so that there is certainty that $10 million in principal amount of Runoff Notes will be

contributed to Reorganized WMI, (ii) provides certain consideration in the form of, inter alia, a

$75 million cash infusion to the Reorganized Debtors by the holders of Allowed Senior Notes

Claims and Allowed Senior Subordinated Notes Claims, in exchange for releases of the creditor

groups providing such consideration, and (iii) provides for those current holders of WMI Equity

Interests that elect to grant the releases set forth in the Seventh Amended Plan to receive

distributions of Reorganized Common Stock. As importantly, the resolution stops the clock on

the accrual of interest and expenses and allows the Debtors to distribute greater value to their

constituents.

37. Likewise, the releases to be granted to AAOC are proper and not animpediment to confirmation of the Plan, as the TPS Group erroneously argues. Bankruptcy

courts consider the following factors, known as the Master Mortgage factors, to determine

whether a release by a debtor should be approved: (i) whether there is an identity of interest

between the debtor and the third party, such that a suit against the non-debtor is, in essence, a

suit against the debtor or will deplete assets of the estate; (ii) whether the non-debtor has made a

substantial contribution of assets to the reorganization; (iii) the essential nature of the release to

the reorganization to the extent that, without the release, there is little likelihood of success;

(iv) an agreement by a substantial majority of creditors to support the release, specifically if the

impacted class or classes overwhelmingly vote to accept the plan; and (v) whether there is a


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provision in the plan for payment of all or substantially all of the claims of the class or classes

affected by the release. In re Master Mortgage Inv. Fund, Inc., 168 B.R. 930, 937 (Bankr. W.D.

Mo. 1994); see also Spansion, 426 B.R. at 143 n.47. Importantly, a court need not find that all of

the Master Mortgage factors apply to approve a debtors release of claims against non-debtors.

Zenith Elecs. Corp., 241 B.R. at 110 (citing Master Mortgage, 168 B.R. at 935).

38. Here, the proposed AAOC releases in Section 41.5 of the Plan meet theMaster Mortgage factors because (i) such releases are essential to the Debtors reorganization

pursuant to the Plan, (ii) the $75 million contribution is a substantial contribution to Reorganized

WMI, (iii) AAOC is providing a $125 million credit facility to Reorganized WMI and

backstopping the Runoff Notes election, and (iv) the Equity Committee and the Creditors

Committee, along with nearly all impaired classes, overwhelmingly support the Plan.

39. The TPS Groups argument that the Bankruptcy Courts previous rulingon this matter precludes any releases to AAOC is unfounded and ignores that AAOC is now

contributing substantial value to the reorganization. In the January Opinion, the Bankruptcy

Court explained that AAOC could not be granted releases by the Debtors because AAOC did not

contribute cash or anything else of a tangible value to the [Sixth Amended] Plan or to creditors

nor provide[] an extraordinary service that would constitute a substantial contribution to the

[Sixth Amended] Plan or case. See January Opinion at 68. Under the previous reorganization

plans, although AAOC assisted in the Global Settlement Agreement and, as found by the

Bankruptcy Court, helped to increase the Debtors estates, see September Opinion at 71,

AAOC did not provide direct monetary value to the Debtors estates. In contrast, as embodied in

the Plan, the current settlement with AAOC provides tangible value and substantially contributes

to the Debtors estates. Without the contributions made by AAOC, thousands of Equity Interest


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not only resolves a number of previous obstacles to confirmation, but also, provides for a

recovery by equity that previously has been unattainable. They also ignore that the settlement

was reached during the mediationordered by the Bankruptcy Courtto resolve, among other

things, the Standing Motion. September Opinion at 138. The TPS Group persists in

perpetuating fictions about vacatur merely enabling AAOC to undo prior litigation choices, see

TPS Group Objection 43, ignoring that the settlement is not a routine agreement between two

parties, but rather, the product of more than three years of contentious litigation involving a wide

array of stakeholders in these bankruptcy proceedings arising from the largest bank failure in

U.S. history.

42. Moreover, as the Bankruptcy Court observed, there is a strong publicpolicy in bankruptcy cases to encourage settlement, Hrg Tr. 1/25/2012 49:23-24, and that

policy is magnified by the historic circumstances of these cases. Concluding protracted and

contentious litigation in a bankruptcy of this magnitude furthers not only the interests of the

multiple parties involved, but also the public interest and public policy in general. See Freedom

Wireless, Inc., v. Boston Commcns Group, Inc., 2006 WL 4451477, at *2 (D. Mass. Oct. 11,

2006) (Global settlement of several complex, multi-party lawsuits will conserve this Courts

and the parties time, money, and other resourcesall in furtherance of the public interest.).

Public policy also favors speedy distributions of more than $7 billion to creditors and other

stakeholders who have already waited over three years and who should not have to endure many

more years of litigation that will not only further delay, but erode (or eliminate entirely) their

recoveries.

43. In opposing vacatur, the TPS Group cites inapposite cases in which courtsdeclined to vacate opinions based on the mere fact of settlement and nothing more, or in


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circumstances in which no exceptional circumstances had not been shown. And, the TPS Group

ignores the multitude of cases in which courts have found that exceptional circumstances did in

fact warrant vacatur in aid of settlement, precisely as they do here. See, e.g., McKinney v.

Philadelphia Hous. Auth., No. 07-4432, 2010 WL 2510382, at *2-4 (E.D. Pa. June 16, 2010)

(finding vacatur warranted when the negative effects of vacating in this case [we]re relatively

minor and the positive effects substantial; the opinion in question was fact-specific with limited

precedential effect; vacatur would be both helpful and harmful to the movant; vacatur would

promote the immediate conservation of judicial resources; and denying vacatur would

jeopardize the settlement, thereby depriving the plaintiff of money she desperately needed);

Freedom Wireless, 2006 WL 4451477, at *2 (finding vacatur warranted in connection with

global settlement of several complex, multi-party lawsuits that would conserve litigant and

judicial resources and further the public interest). Indeed, courts have undeniably been more

flexible where vacatur would bring an end to the tortured history of a litigation, as it would in

the context of the Debtors bankruptcy cases. Tommy Hilfiger Licensing, Inc. v. Costco Cos.,

99-3894, 2002 WL 31654958, at *3 (S.D.N.Y. Nov. 25, 2002); see also BMC, LLC v. Verlan

Fire Ins. Co., 04-0105A, 2008 WL 2858737, at *2 (W.D.N.Y. July 22, 2008) (granting a motion

for partial vacatur after noting the long and tortured history of the case and finding exceptional

circumstances because, among other reasons, allowing vacatur in this case would allow the

Bankruptcy Court and the parties to avoid the further expenditure of valuable time and

resources).

44. Here, exceptional circumstances are indeed present. If the requestedvacatur is granted (and the Plan is consummated), many stakeholders will receive sizeable

recoveries in connection with their claims. Indeed, pursuant to the Plan, Preferred Equity


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Interest holders of WMI are slated to receive substantially all of the new equity of reorganized

WMIwhich would not be possible absent the settlement embodied in the Debtors Plan. The

prospect of distributions to literally thousands of shareholders, in a case in which the existence of

any equity value is hotly disputed, in and of itself, is an exceptional circumstance that, among

others, warrants vacatur.

45. Most notably, absent the requested vacatur, the accompanying collapse ofthe Plan could result in the termination of the Global Settlement Agreement,

15which would

mean the loss of billions of dollars in recoveries (in exchange for litigation that the Bankruptcy

Court has already determined would be challenging). Clearly, such a proposition is exceptional,

as reflected by all of the September Appellants16 support of the requested vacatur and by the

agreement of all of the September Appellants to dismiss their appeals of the September Order

and September Opinion if the Bankruptcy Court confirms the Plan and grants the vacatur.

46. The failure to obtain vacatur will have dire consequences for the Debtorsestates, their creditors, and their shareholders. It will cause the needless incurrence of expenses

and further dilute or entirely evaporate the recoveries of junior creditors due to the ongoing

accrual of postpetition interest. See Goulding Decl. at 23. Indeed, the Bankruptcy Court

previously found that the financial harm to all the other creditors and stakeholders in this case

from further delay would be enormous. Hrg Tr. 1/11/2012 72:10-15.

15

Currently, the Global Settlement Agreement becomes terminable by any party on February 21, 2012. There is noguaranteeing that the FDIC and JPMC will continue to believe it to be in their respective best interests to continue tobe parties to the Global Settlement Agreement and, on that basis, the risk of the settlements and compromisesrepresented thereby being lost cannot be diminished.

16 September Appellants means the following parties who filed notices of appeal or cross-appeal from theSeptember Order and September Opinion: the Debtors, the Equity Committee, the Creditors Committee, Aurelius,Appaloosa, Owl Creek, Centerbridge, the WMB Noteholders, Normandy Hill Capital L.P., and Wells Fargo Bank,National Association.


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47. The failure to obtain vacatur also will impose ongoing, substantial burdenson the judicial resources of both the Bankruptcy Court and the District Court, as the pending

appeals will be required to continue, rather than be dismissed, with prejudice, pursuant to the

Settlement.

48. Without the requested vacatur, the case will devolve into a litigationmorass as the Bankruptcy Court noted with respect to the Standing Motion and the need for

Mediation. September Opinion at 138. On the other hand, the settlement that resulted from that

Mediation, and provides for vacatur, will avoid this litigation morass, id., and, notably,

conserve not only estate resources, but also judicial resourcesboth of which qualify as

exceptional circumstances. BMC, 2008 WL 2858737, at *2; accord Tommy Hilfiger, 2002

WL 31654958, at *3.

49. Finally, unable to overcome the exceptional reality of these bankruptcyproceedings, the TPS Group also claims that the Bankruptcy Court improperly relied on Rule

60(b)(6) of the Federal Rules of Civil Procedure, rather than looking solely to the analysis in

U.S. Bancorp Mortg. Co v. Bonner Mall Pship, 513 U.S. 18 (1994), in which the Supreme Court

considered an appellate courts authority under 28 U.S.C. 2106 to vacate a lower courts

opinion. As the TPS Group concedes, however, both approaches condition vacatur in

furtherance of settlement on the existence of exceptional circumstances. See TPS Group

Objection 25, 48. Therefore, the Bankruptcy Court correctly characterized this issue as

presenting a distinction without a difference. Hrg Tr. 1/25/2012 47:25.17 Exceptional

17 Some circuits have held that vacatur under Rule 60(b), as opposed to 28 U.S.C. 2106, does not even requireexceptional circumstances. See Marseilles Hydro Power LLC, 481 F.3d 1002, 1004 (7th Cir. 2006); AmericanGames, Inc. v. Trade Prods., Inc., 142 F.3d 1164 (9th Cir. 1997). The Bankruptcy Court, however, analyzed vacaturunder the more stringent exceptional-circumstances standard, whether viewed through the lens of Rule 60(b)(6) orBonner Mall. Contrary to the TPS Groups objection, therefore, the Bankruptcy Courts vacatur analysis plainlysatisfies the Bonner Mall standard the TPS Group advocates.


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circumstances surrounding these bankruptcy proceedings and the Plan warrant vacatur under any

analytical framework, and the TPS Groups objection presents no legal or factual obstacle to

confirmation.18

18 Straining for another ground to object, the TPS Group argues that Rule 60(b)(6) applies only to final judgments,and the Standing Motion Ruling is interlocutory. See TPS Group Objection 46 n.16. First, as the Debtors, amongothers, have previously argued, the Standing Motion Ruling is final and appealable as of right. See Official Comm.of Unsecured Creditors of Life Serv. Sys., Inc. v. Westmoreland County MH/MR, 183 F.3d 273, 277 (3d Cir. 1999)(stating that the most important factor a court should consider in determining if a decision is final for purposes ofan appeal is the impact on the assets of the estate). Notably, resolution of the Standing Motion will have a majorimpact on the assets of the estate as the Standing Motion concerns approximately $2 billion in Claims. Second, evenif the Standing Motion Ruling were non-final, that would not advance the TPS Groups cause, because courts havedetermined that Bonner Malls exceptional circumstances standard does not even apply when a trial court vacatesa non-final order in furtherance of settlement. See, e.g.,Dana v. E.S. Originals, Inc., 342 F.3d 1320, 1327-28 (Fed.

Cir. 2003) (Dyk, J., concurring) (observing that Bonner Mall does not prevent a district court from vacating nonfinal orders pursuant to a settlement agreement); Circle K Corp. v. United States, No. 12-86 T, 1996 WL 904545, at*1 (Fed. Ct. Claims Dec. 9, 1996) (concluding that because the orders at issue in the parties joint motion do notyield an entry of judgment, the holding of U.S. Bancorp is inapplicable).

In suggesting, further, that a more stringent standard than exceptional circumstances governs all non-final rulings,the TPS Group relies on a facially inapplicable provision, Federal Rule of Civil Procedure 54(d) [sic] (presumably54(b)). See TPS Objection 46 n.16. Rule 54(b) applies to motions to reconsiderorders that fully adjudicate[ ]one claim in a multi-claim complaint while leaving other claims to be resolved through further proceedings. SeeFed. R. Civ. P. 54(b). The rule has no application to the Standing Motion Rulingwhich, as the Bankruptcy Courtalready has expressly found, was not on the merits and thus did not fully adjudicate any claim for equitabledisallowance. Hrg Tr. 48:16-49:22. Moreover, as the Bankruptcy Court already observed, vacatur in furtherance ofsettlement does not require reconsideration of the Standing Motion Ruling. See id. 46:23-25 ([I]f the court does in

fact vacate the order, the trial court is not reversing itself.). Tellingly, not one of the Rule 54(b) reconsiderationcases that the TPS Group cites has anything to do with vacatur in connection with settlement, much less discussesthe standard applicable thereto. See TPS Objection 46 n.16 (citing Cataldo v. Moses, 361 F. Supp.2d 420 (D.N.J.2004) (vacating order dismissing New Jersey Tort Claims Act claims in light of intervening New Jersey SupremeCourt decision and then declining to exercise supplemental jurisdiction over claims); Calyon N.Y. Branch v. Am.Home Mortg. Corp., 383 B.R. 585 (Bankr. D. Del. 2008) (declining to reconsider and revise findings of fact andconclusions of law entered in first phase of adversary proceeding, in which additional claims remained to beadjudicated); Castrillo v. Am. Home Mortg. Serv. Inc., No, 09-4369, 2010 WL 1424398, at *4 (E.D. La Apr. 5,2010) (declining to reconsider dismissal of fraud claims for failure to plead detrimental reliance)).


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WHEREFORE the Debtors respectfully request entry of an order (i) overrulingthe Objections, (ii) confirming the Plan, and (ii i) granting the Debtors such other and furtherrelief as the Bankruptcy Court may deem just and appropriate.Dated: Wilmington, DelawareFebtuary 13, 2012

US_ACTIVE :\439 157 18\07\7983 1.0003RLF I 5828686v. 1

Mark D. Collins (No. 2981)Michael J. Merchant (No. 3854)Travis A. McRoberts (5274)RICHARDS, LAYTON & FINGER, P.A.One Rodney Square920 Nmih King StreetWilmington, Delaware 19801Telephone: (302) 651 -7700Facsimile: (302) 651 -7701

- and -

Brian S. Rosen, Esq.WElL, GOTSHAL & MANGES LLP767 Fifth AvenueNew York, New York 10153Telephone: (212) 310-8000Facsimile: (212) 310-8007Attorneys for DebtorsandDebtors in Possession

29


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EXHIBIT A

Third Circuit Decision


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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

February 6, 2012

Panel No. BCO-057-E

Panel No. BCO-058-E

No. 12-1263

Washington Mutual, Inc., et al,

Debtors

Black Horse Capital Master Fund Ltd; Black Horse Capital (QP) LP; Greywolf

Capital Partners II; Greywolf Overseas Fund; Guggenheim Portfolio Company

VII, LLC: HFR RVA Combined Master Trust ; IAM Mini-Fund 14 Limited; LMA

SPC; Lonestar Partners LP;Mariner LDC; Nisswa Convertibles Master Fund Ltd; Nisswa Fixed Income

Master Fund Ltd; Nisswa Master Fund Ltd; Paige Opportunity Partners LP; Paige

Opportunity Partners Master Fund; Pandora Select Partners, LP;

Pine Edge Value Investors Ltd; Riva Ridge Capital Management LP; Riva Ridge

Master Fund Ltd.; Scoggin Capital Management II LLC; Scoggin International

Fund Ltd.; Scoggin Worldwide Fund Ltd.; Visium Global Fund Master Fund, Ltd;

VR Global Partners LP.; Whitebox Asymmetric Partners, LP; Whitebox Combined

Partners, LP; Whitebox Combined Partners, LP; Whitebox Convertible Arbitrage

Partners, LP; Whitebox Hedged High Yield Partners, LP;

Whitebox Special Opportunities Fund LP, Series B,

v.

JP Morgan Chase Bank, N.A., JP Morgan Chase & Co; Washington Mutual, Inc;

Washington Mutual Preferred Funding, LLC; Washington Mutual Preferred

Funding (Cayman) I Ltd, LLC; Washington Mutual Preferred Funding Trust I;

Wilmington Trust Company; Washington Mutual Preferred Funding Trust II:

Wilmington Trust Company; Washington Mutual Preferred Funding Trust III:

Wilmington Trust Company;Washington Mutual Preferred Funding Trust IV: Wilmington Mutual Trust

Company; Washington Mutual Preferred Funding

Black Horse Capital, LP; Black Horse Capital Master Fund Ltd,; Greywolf Capital

Partners II, LP; Pines Edge Value Investors, Ltd.; Pine River Convertibles Master

Case: 12-1263 Document: 003110806602 Page: 1 Date Filed: 02/10/2012


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2

Fund Ltd, (f/k/a Nisswa Convertibles Master Fund Ltd.); Pine River Fixed Income

Master Fund Ltd. (f/k/a/ Nisswa Fixed Income Master Fund Ltd.);

Pine River Master Fund Ltd. (f/k/a/Nisswa Master Fund, Ltd.); LMA SPC for and

on behalf of the Map 89 Segregated Portfolio; Scoggin Worldwide Fund, Ltd.;

Scoggin Capital Management II LLC: Scoggin International Fund Ltd.; Visium

Global Master Fund, Ltd; VR Global Partners, L.P.,

Appellants(D. Del. No. 1-11-cv-00124)

1. Motion by Appellants for Expedited Review and to Stay the Bankruptcy

Plan Confirmation Hearing;

2. Clerks submission for possible dismissal due to jurisdictional defect;

3. Response by Appellants In Support of Jurisdiction;

4. Response by Appellee Washington Mutual, Inc. in Opposition to Motion

for Expedited Review and to Stay Bankruptcy Plan Confirmation Hearing;

5. Corrected Response by Appellee Washington Mutual to Clerks order

dated 2/02/12 advising of possible dismissal due to lack of jurisdiction;

6. Joinder by Appellee JP Morgan Chase Bank N.A to Washington Mutual,

Incs Response to Clerks order dated 2/02/12 advising of possible

dismissal due to lack of jurisdiction;

7. Joinder filed by Appellee JP Morgan Chase Bank NA to Washington

Mutual Inc.s Response in Opposition to Motion for Expedited Review and

to Stay the Bankruptcy Plan Confirmation Hearing;

8. Joinder of Official Committee of Equity Security Holders to Washington

Mutual Inc.s Response in Opposition to Motion for Expedited Review and


9. Joinder of Official Committee of Equity Security Holders to Washington

Mutual Inc.s to Clerks order dated 2/02/12 advising of possibledismissal due to lack of jurisdiction;

10. Joinder of Official Committee of Unsecured Creditors to Washington

Mutual Inc.s Response in Opposition for Expedited Review and




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3


Mutual Inc.s Response to the Clerks Order Regarding the Immediate

Appealability Under 28 U.S.C. 1292(a)(1) and Denial of a Stay of

Confirmation Hearing Proceedings;

12. Motion filed by Official Committee of Equity Security Holders to proceedas Intervenors in Support of Appellees in No. 12-1263.

No. 12-1264

In re: BLACK HORSE CAPITAL, LP et al,

Petitioners(D. Del. No. 1-11-cv-00124)

1. Petition by Petitioners for Writ of Mandamus;

2. Appendix by Petitioners In Support of Petition for Writ of Mandamus;

3. Motion by Petitioners for Expedited Review and to Stay the Bankruptcy

Plan Confirmation Hearing;

4. Response by Respondent Washington Mutual, Inc in Opposition to Motion


5. Joinder filed by Respondent JP Morgan Chase Bank N.A. to WashingtonMutual Inc.s Response in Opposition to Motion for Expedited Review and


6. Joinder by Official Committee of Equity Security Holders to

Response by Washington Mutual, Inc. in Opposition to Motion



Mutual Inc.s Response in Opposition for Expedited Review and


8. Motion filed by Official Committee of Equity Security Holders to proceed

as Intervenors in Support of Respondents in No. 12-1264.



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4

Present: SCIRICA, SMITH and CHAGARES, Circuit Judges

______________________________ORDER________________________________

The foregoing appeal, No. 12-1263, is dismissed for lack of jurisdiction. The DistrictCourt did not certify an appeal, and the order is not appealable as a final order. See 28

U.S.C. 158(d). The District Courts decision to decline to stay a hearing scheduled to

take place in Bankruptcy Court on February 16, 2012, does not amount[] to an effective

dismissal of the underlying suit, CTF Hotel Holdings,Inc. v. Marriott Intl, Inc., 381

F.3d 131, 135 (3d Cir. 2004), or qualify as a collateral order under Cohen v. Beneficial

Industrial Loan Corp., 337 U.S. 541 (1949), or deny a procedurally proper independent

mandamus action, see Fed. R. App. P. 21; see alsoDetroit & Mackinac Ry. Co. v. Mich.

R.R. Commn, 240 U.S. 564, 571 (1916). In addition, the District Courts order is not

immediately appealable under 28 U.S.C. 1292(a)(1). The decision was not designed

to accord or protect some or all of the substantive relief sought by a complaint in morethan a [temporary] fashion. In re Pressman-Gutman Co., Inc., 459 F.3d 383, 392 (3d

Cir. 2006); see also In re Trans World Airlines, 18 F.3d 208 (3d Cir. 1994) (grant of stay

pending appeal in bankruptcy proceeding does not constitute an injunction under 1292).

Because the Court lacks jurisdiction over the appeal, the pending motions are dismissed

as moot.

In the alternative, even assuming jurisdiction exists, we would conclude the Bankruptcy

Court and the District Court did not err in denying the stay at this stage in the

proceedings. To determine whether to grant a stay pending appeal, a court must consider:

(1) whether the stay applicant has made a strong showing that he is likely to succeed onthe merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether

issuance of the stay will substantially injure the other parties interested in the proceeding;

and (4) where the public interest lies. Republic of Philippines v. Westinghouse Elec.

Corp., 949 F.2d 653, 658 (3d Cir. 1991). These factors do not warrant a stay pending

appeal in this instance. Nor have Petitioners offered to post a supersedeas bond.1

Petitioners also seek a writ of mandamus which appellate courts issue only in

exceptional cases where the traditional bases for jurisdiction do not apply. United

1

Fed. R. Bankr. P. 8005 grants the bankruptcy judge discretion to stay or continueproceedings pending appeal. Collier states, Once a bankruptcy court order, judgment or

decree has been entered . . . the prevailing party is free to execute upon or otherwise seek

to enforce it. However, the losing party is permitted to seek a stay of the judgment to

maintain the status quo pending appeal. 10 Collier on Bankruptcy 8005.1 (16th ed.

2011). Collier also notes that Rule 8005 permits a bankruptcy court to go forward with

respect to hearings on a plan pending [an] appeal of disputed ownership of estate assets.

Id. 8005.13.



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6

Appeal Nos. 12-1263 and 12-1264

In re: Washington Mutual, et al.

In re: Black Horse Capital, et al

Page 2

Adam P. Strochak, Esq.Miles Jarrad Wright, Esq.

Mark D. Collins, Esq.

Marcos A. Ramos, Esq.

Travis A. McRoberts, Esq.



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MARCIA M. WALDRON

CLERK

OFFICE OF THE CLERK

UNITED STATES COURT OF APPEALS21400 UNITED STATES COURTHOUSE

601 MARKET STREET

PHILADELPHIA, PA 19106-1790

Website: www.ca3.uscourts.gov

February 10, 2012

TELEPHONE

215-597-2995

Peter T Dalleo

United States District Court for the District of DelawareLockbox 18

J. Caleb Boggs Federal Building844 North King Street

Wilmington, DE 19801

RE: In Re: Black Horse Capital, LP et al

Case Number: 12-1264

District Case Number: 1-11-cv-00124

Dear Clerk:

Enclosed please find copies of the following filed today in the above-entitled case:

1. Opinion

2. Certified copy of the Judgment denying the issuance of a writ of mandamus/prohibition.

Please acknowledge receipt of the enclosed copy of this form.

Very truly yours,

Marcia M. Waldron, Clerk

By: Maria, Case Manager

267-299-4937

cc:

William P. Bowden, Esq.Mark D. Collins, Esq.

Bernard G. Conaway, Esq.



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Kathleen C. Davis, Esq.

Marla R. Eskin, Esq.Julie A. Finocchiaro, Esq.

Brian D. Glueckstein, Esq.

Mark T. Hurford, Esq.

Adam G. Landis, Esq.Joseph J. Langkamer, Esq.

L. Rachel Lerman, Esq.

Timothy K. Lewis, Esq.Travis A. Mc Roberts, Esq.

Matthew B. McGuire, Esq.

Michael J. Merchant, Esq.Stacy L. Newman, Esq.


John H. Schanne II, Esq.

Honorable Gregory M. Sleet

Robert J. Stark, Esq.David B. Stratton, Esq.

Adam P. Strochak, Esq.Gregory A. Taylor, Esq.

Nancy Winkelman, Esq.

Miles J. Wright, Esq.



39/80

MARCIA M. WALDRON

CLERK

OFFICE OF THE CLERK

UNITED STATES COURT OF APPEALS21400 UNITED STATES COURTHOUSE

601 MARKET STREET

PHILADELPHIA, PA 19106-1790

Website: www.ca3.uscourts.gov

February 10, 2012

TELEPHONE

215-597-2995

William P. Bowden, Esq.

Ashby & Geddes

500 Delaware Avenue

P.O. Box 1150, 8th FloorWilmington, DE 19899

Mark D. Collins, Esq.

Richards, Layton & Finger

One Rodney Square920 North King Street


Bernard G. Conaway, Esq.

Campbell & Levine

800 North King StreetSuite 300

Wilmington, DE 19801-0000

Kathleen C. Davis, Esq.

Campbell & Levine



Marla R. Eskin, Esq.

Campbell & Levine



Julie A. Finocchiaro, Esq.


One Rodney Square



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920 North King Street


Brian D. Glueckstein, Esq.

Sullivan & Cromwell125 Broad Street

New York, NY 10004-0000

Mark T. Hurford, Esq.

Campbell & Levine800 North King Street

Suite 300


Adam G. Landis, Esq.

Landis, Rath & Cobb

919 Market Street

Suite 1800, P.O. Box 2087Wilmington, DE 19899

Joseph J. Langkamer, Esq.

Schnader Harrison Segal & Lewis1600 Market Street

Suite 3600

Philadelphia, PA 19103

L. Rachel Lerman, Esq.

Akin, Gump, Strauss, Hauer & Feld

2029 Century Park EastSuite 2400

Los Angeles, CA 90067-0000

Timothy K. Lewis, Esq.


Suite 3600


Travis A. Mc Roberts, Esq.




Matthew B. McGuire, Esq.

Landis, Rath & Cobb919 Market Street



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Suite 1800, P.O. Box 2087


Michael J. Merchant, Esq.

Richards, Layton & FingerOne Rodney Square

920 North King Street


Stacy L. Newman, Esq.Ashby & Geddes

500 Delaware Avenue

P.O. Box 1150, 8th Floor






John H. Schanne II, Esq.Pepper Hamilton

1313 Market Street



Robert J. Stark, Esq.

Brown Rudnick7 Times Square

47th Floor

New York, NY 10036-0000

David B. Stratton, Esq.Pepper Hamilton

1313 Market Street



Adam P. Strochak, Esq.

Weil, Gotshal & Manges1300 I Street, N.W.

Suite 900

Washington, DC 20005-0000

Gregory A. Taylor, Esq.Ashby & Geddes

500 Delaware Avenue



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P.O. Box 1150, 8th Floor


Nancy Winkelman, Esq.


Suite 3600


Miles J. Wright, Esq.Weil, Gotshal & Manges

1300 I Street, N.W.

Suite 900

Washington, DC 20005-0000

RE: In Re: Washington Mutual, et al, et al

Case Number: 12-1263District Case Number: 1-11-cv-00124

ENTRY OF JUDGMENT

Today, February 10, 2012 the Court issued a case dispositive order in the above-captioned

matter which serves as this Court's judgment. Fed. R. App. P. 36.

If you wish to seek review of the Court's decision, you may file a petition for rehearing. The

procedures for filing a petition for rehearing are set forth in Fed. R. App. P. 35 and 40, 3rd Cir.LAR 35 and 40, and summarized below.

Time for Filing:14 days after entry of judgment

45 days after entry of judgment in a civil case if the United States is a party

Page Limits:

15 pages

Attachments:A copy of the panel's dispositive order only. No other attachments are permitted without first

obtaining leave from the Court.

Unless the petition specifies that the petition seeks only panel rehearing, the petition will beconstrued as requesting both panel and en banc rehearing. If separate petitions for panel

rehearing and rehearing en banc are submitted, they will be treated as a single document and willbe subject to a combined 15 page limit. If only panel rehearing is sought, the Court's rules do not

provide for the subsequent filing of a petition for rehearing en banc in the event that the petition

seeking only panel rehearing is denied.



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Please consult the Rules of the Supreme Court of the United States regarding the timing and

requirements for filing a petition for writ of certiorari.

Very truly yours,

Marcia M. Waldron, Clerk

By: Maria, Case Manager

267-299-4937

cc: Mr.Peter T Dalleo



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US_ACTIVE:\43915718\07\79831.0003RLF1 5828686v. 1

EXHIBIT B

Omnibus Response Chart


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US_ACTIVE:\43915718\07\79831.0003RLF1 5828686v. 1

TABLE OF CONTENTS

Page

Objections

1. Objection of the TPS Consortium................................................................................. 1

2. Objection of the TPS Group ......................................................................................... 5

3. Objection of the ANICO Plaintiffs ............................................................................... 5

4. Objection of the Oregon Department of Revenue ........................................................ 7

5. Objection of MBS Plaintiffs, Filed by Boilermakers National Annuity Trust,Doral Bank Puerto Rico, Policemens Annuity and Benefit Fund of theCity of Chicago ...................................................................................................... 9

6. Objection of Stephen J. Rotella, Casey, et al. ............................................................. 12

7. Objections of Pro Se Parties ....................................................................................... 13


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US_ACTIVE:\43915718\07\79831.0003 3RLF1 5828686V. 1

1. Objection of the TPS Consortium

purchase additional LLC interests from thwas not subject to section 365(c)(2) becauanalogous to an old equity investment (citation omitted)).

(f) As explained in the Objection of DebtConsortium of Trust Preferred Security H

Confirmation Proceedings Pending Appe

[D.I. 9314], incorporated by reference hemeritless argument fails for the same reasthe Bankruptcy Court ruled in the Septemjurisdiction to enforce its previous orders(The TPS Consortiums argument that than appeal divests the bankruptcy court ofmatter is too broad.). Black Horse CapiNA, Inc. (In re Washington Mutual, Inc.)19, 2012) (agreeing with the Bankruptcy has jurisdiction to consider confirmation of the TPS, notwithstanding the pendencydetermining who owns them); see also BLtd. v. JPMorgan Chase Bank, N.A. (In r12-1263 (3d Cir. Feb. 10, 2012).

(g) The Bankruptcy Court already has rulMarshall, the Bankruptcy Court does havestate has against JPMC and the FDIC, anSee September Opinion at 9 (concluding

decision does not support the TPS Consolacks jurisdiction over the [Global Settlemof the Modified Plan). Black Horse CapNA, Inc. (In re Washington Mutual, Inc.)19, 2012); see also Black Horse Capital MChase Bank, N.A. (In re Washington Mu


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US_ACTIVE:\43915718\07\79831.0003 4RLF1 5828686V. 1

1. Objection of the TPS Consortium

Feb. 10, 2012).

(h) Regarding the calculation of the federCourt unequivocally determined that sectCode expressly provides that such interefrom the date of the filing of the petitionrate effective on the petition date that shoOpinion at 88 (citing 11 U.S.C. 726(a)(further concluded that [t]he case law is upetition date at which the federal judgmenof awarding interest under section 726(a)(citations omitted). Accordingly, the reaConsortium should be denied.

(i) As more fully set forth in the January

Opinion, the compromise and settlement Settlement Agreement and the transactionreasonable, and in the best interests of theand the Debtors chapter 11 estates. The determined that the Global Settlement Agand that the Sixth Amended Plan and the good faith. See September Opinion at 31also Confirmation Memorandum at 36-40Bankruptcy Courts statements at the heastatement for the Modified Plan and the Jconference, this determination constitutesubject to relitigation or reconsideration.


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US_ACTIVE:\43915718\07\79831.0003 5RLF1 5828686V. 1

2. Objection of the TPS Group

Objection Respons

The TPS Group objects that:

(a) the global understanding in the Plan among the Debtors, theEquity Committee, AAOC and others, is unreasonable;

(b) the Plan improperly releases the Debtors claims against AAOC;and

(c) the requested vacatur in the Plan is not allowable.

(a) See supra 34-36.

(b) See supra 37-39.

(c) See supra 40-49.

3. Objection of the ANICO Plaintiffs

Objection Respons

American National Insurance Company, American National Propertyand Casualty Company, Farm Family Life Insurance Company, FarmFamily Casualty Insurance Company, and National Western LifeInsurance Company (collectively, the ANICO Plaintiffs) objectthat the Plan and the Global Settlement Agreements Stipulation andOrder of Dismissal With Prejudice with respect to the ANICOLitigation may release or bar claims that the FDIC Receiver does notown.

The Debtors treatment of the ANICO Plathe Bankruptcy Courts ruling in the JanuBankruptcy Court ruled that the Plan mubeing provided under the Plan or the GloPlaintiffs of their direct claims against anand that the Court is making no determinin the ANICO Litigation. January OpinModified Plan, and now the Plan, provide

Nothing contained herein or inwith respect to the releases, exsimilar provisions is intendedenjoin or restrain the prosecutioasserted, or that could have beLitigation against any non-Dhowever, that the foregoing is


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US_ACTIVE:\43915718\07\79831.0003 6RLF1 5828686V. 1

3. Objection of the ANICO Plaintiffs

rights of any such non-Debtornotice and a hearing, the validiof or standing to assert any provided, further, that the Bmaking, either pursuant to the

Order, a determination as to

without limitation, the Deb

asserted, or that could have be

Litigation . . . .

See Plan 41.6(g). Further, the Bankrupstipulation of dismissal that the Debtors fexpressly state that they are dismissing onJanuary Opinion at 80-81. In response, thDismissal With Prejudice in the Global amended to explicitly note that WMI, JPMclaims, causes of action, and objections oLitigation] which are derivative in natureBankshall be and hereby are dismissed wor any part thereof. See Global Settlemadded).

To the extent that the ANICO Plaintiffs rnarrows the releases embodied in the Planinappropriate and inconsistent with the PGlobal Settlement Agreement are consistJanuary Opinion, and the ANICO Plaintifoverruled.


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4. Objection of the Oregon Department of Revenue

Objection Respons

The Department of Revenue for the State of Oregon (the Oregon

DOR) objects that:

(a) the Plan does not (expressly) provide for post-confirmationinterest on the Oregon DORs asserted Claims; and

(b) the proposed non-Debtor releases set forth in the Plan are toobroad and should expressly carve-out the Oregon DORs Claims,including any

por7-omnibus-response-0812229120213000000000027

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