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  • WMI Lawyers (Weil, Gotshal and Manges) Rely Heavily on Section 547 and 548 of the Bankruptcy code to Outline WMI’s Case for Constructive “Fraudulent Transfer”, Return of Assets and Request for Jury Trial 0 comments
    Jun 4, 2009 10:25 PM | about stocks: WMIH, JPM

    In the eighteen counterclaims filed and served on May 29, 2009, Weil, Gotshal and Manges refers to Section 548 of the Bankruptcy Code which allows a debtor to recover assets that have been 'fraudulently' conveyed.   All that is required is a showing that WMI's property was seized (1) within one year of its bankruptcy filing, (2) while WMI was insolvent or undercapitalized or was made insolvent or undercapitalized by the seizure, and (3) that WMI did not receive reasonably equivalent value for the seized property.  Closely tied to section 548 is WMI’s prayer for return of capital infusions the day before the OTS placed WMB/WMBfsb into receivership.

    In addition, the filed counterclaims argue that JPMc is in possession of Trust Securities and is attempting to lay claim to tax refunds that are property of WMI.  WMI also reasserts its ownership of the 3.7 Billion deposit held in WMB, the Legacy Rabbi Trusts, Pension and 401(k) plans, the BOLI and Split Dollar policies and some 3 million plus Visa shares.  WMI contends that these assets were fraudulently transferred and thus the property of WMI and goes on to argue that JPMc is exercising “without permission” management over insurance policies that belong to WMI and that JPMc is not entitled to any relief.  The court assessed values of the assets remain unknown but the 401(k) plan has been valued at near 1 billion, the Visa Shares may have a market value near 207 million and the tax returns may be in the billions.

    One of the biggest counterclaims is centered on JPMc’s use of WMI Trademarks and Servicemarks without legal ownership and WMI assigned a value of 6 billion for the marks and may seek treble damages in the jury trial.

    The case(s) are being handled in the United States Bankruptcy Court for the District of Delaware and Judge Mary Walrath is presiding.  Judge Walrath stated in an earlier press release that she may make some rulings in June of 2009.

    Stocks: WMIH, JPM
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