I hope that this doesn't sound harsh, but I didn't get ANY sense that there was discussion of a financial settlement with equity in today's hearing. There was a whole lot of discussion of settling the issues about the scope of DISCOVERY, but that was about it. I didn't hear anything that would lead me to think that the debtor was entertaining any thoughts of making equity a financial offer -- only providing it with the information to evaluate the "global settlement agreement" -- which of course leaves equity out in the cold.
When he got up on his hind legs today, the first thing Rosen did was attempt to put words in the mouth of the EC to the effect that there are "serious negotiations" going on. After Peter Calamari went through “the slides”, the one-two Rosen-Calimari punch debtors had Justin Nelson at Susman Godfrey(EC) so worked up that he was nearly spluttering. Likewise, this act momentarily fooled James Stoll (Brown Rudnick, counsel for TPS) into believing that his trust preferreds were going to be “jumped over” by equity.
But given everything we’ve seen from Rosen – all of his rhetorical flourishes that turn out to be hogwash – at this late date, why do so many of you insist on believing ANYTHING that Rosen says in open court? Quoting Rosen to prove there's an imminent financial settlement being negotiated is like quoting Satan instead of Scriptures.
Don't forget that by agreeing to hold the examiner motion in abeyance for a couple of weeks, the EC strengthens its hand by examining the reason why, exactly, the debtor agreed to settle the litigation. Once that information is known, the EC can force the debtor to modify the disclosure statement and the plan of reorganization to do a better job describing why, exactly, equity should be "out of the money".
So far, there are only 5-6 total pages in the DS that summarize the litigation, and why it was settled. None of the "privileged" (attorney-client work product) materials are in there at this point. All of you will recall that Judge Walrath said that eventually she thought that the debtor would have to disclose the work product to confirm the POR.
The EC is no doubt "negotiating with debtor" (Rosen’s words, not the EC’s) by agreeing to this temporary delay. Why? Two reasons: First, because they have to – there’s no way the EC can proceed with an examiner motion if they’ve left any of the proverbial discovery stones unturned. Imagine going forward with an examiner motion with Rosen skulking behind you saying, “They didn’t attend our meet & confer session!” Second, reviewing the data repository allows the EC to uncover and establish the evidence behind the debtor’s reasons for settling.
Once this information is known, and raised by way of an objection, it forces the debtor to respond to the EC's allegation that debtor’s litigation and investigation was incomplete and inadequate. In effect, by agreeing to this delay and taking what discovery Rosen is willing to offer, the EC is forcing Rosen to justify his own settlement, using his own litigation history, as revealed by the EC.
Once Rosen’s settlement rationale is established (and scoffed at), it is much easier for the EC to prove that the POR and the GSA are not reasonable and/or not confirmable.
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That’s enough for the moment.
Kind regards to all,