Vous êtes sur la page 1sur 19

Docket #9320 Date Filed: 1/4/2012

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ____________________________________ ) Chapter 11 In re: ) ) Case No. 08-12229 (MFW) WASHINGTON MUTUAL, INC., et al., ) Jointly Administered ) Objection Deadline: January 4, 2012 @ 4:00 p.m. Debtors ) Hearing Date: January 11, 2012 @ 2:00 p.m. ____________________________________) Related Docket Nos. 9178, 9179, 9180 & 9181 OBJECTION OF THE TPS GROUP TO DEBTORS MOTION FOR APPROVAL OF DISCLOSURE STATEMENT FOR THE JOINT PLAN OF AFFILIATED DEBTORS PURSUANT TO CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE VR Global Partners, L.P., The Visium Funds, Black Horse Capital, Greywolf Capital Management LP, and Pine River Capital L.P. (the TPS Group), by and through their undersigned counsel, hereby file this objection (the Objection) to the Debtors Motion (the Motion) for an Order, Pursuant to Sections 105, 502, 1125, 1126 and 1128 of the Bankruptcy Code and Bankruptcy Rules 2002, 3003, 3017, 3018, 3019, 3020, and 9006 (i) Approving the Proposed Disclosure Statement (the Disclosure Statement) [Docket No. 9179] and the Form and Manner of Notice of the 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 (the Plan) [Docket No. 9181].1 In support of this Objection, the TPS Group respectfully represents as follows: PRELIMINARY STATEMENT 1. This Disclosure Statement fails to provide even the most basic and fundamental

information about the purported settlement with, and release of claims against, the so-called

Capitalized terms not otherwise defined herein shall bear the meanings ascribed thereto in the Plan and/or Disclosure Statement, as applicable.
{D0216385.1 }

0q6=,!$ 5a 0812229120104000000000021

Settlement Noteholders.2 Based on the extensive evidentiary record developed during four days of testimony this past summer, this Court concluded that there was evidentiary support for claims of insider trading and inequitable conduct against the Settlement Noteholders. The evidence on which the Court relied was virtually unrefuted. And yet, with no additional discovery (we are not even told how much the Settlement Noteholders made in trading profits while in possession of material inside information), the Plan proponents now present a settlement that they claim is in the best interests of all parties in interest. (Disclosure Statement at 10.) This remarkable assertion is belied by the purported settlement itself: the Settlement Noteholders pay nothing, and no part of their claims are disallowed. The only consequence to the Settlement Noteholders is that they stand to make a 7 percent profit on future secured loans to the Reorganized Debtor. For this they receive full releases. And, to add insult to injury, the Settlement Noteholders will be given a seat on the board of directors of the Reorganized Debtor. Thus, if the Plan is confirmed as currently written, the Settlement Noteholders will escape any liability for their inequitable conduct, and instead will be offered the opportunity to be the principal lender to the Reorganized Debtor and a fiduciary to the Debtors equity holders (which will be issued new stock under the Plan). Plainly, the Disclosure Statement fails to justify this lopsided and extraordinary settlementindeed, it seems impossible that there is any reasonable basis for it. 2. But perhaps the most breathtaking aspect of the Plan is the requirement that this

Court vacate more than 30 pages of its September 13, 2011, opinion (the September 13 Opinion) supporting its finding that the Equity Committee and the TPS Group have established
2

The term Settlement Noteholders refers to Appaloosa Management, L.P. (Appaloosa), Aurelius Capital Management LP (Aurelius), Centerbridge Partners, LP (Centerbridge) and Owl Creek Asset Management, L.P. (Owl Creek), and certain of their respective affiliates and subsidiaries.

{D0216385.1 }

sufficient evidentiary support for claims of inequitable conduct against the Settlement Noteholders. This provision renders the Plan patently unconfirmable. As the Supreme Court has recognized, vacatur as a condition of settlement is an extraordinary remedy that is appropriate only in exceptional circumstances. See U.S. Bancorp Mortgage Co. v. Bonner Mall Pship, 513 U.S. 18, 29 (1994). No such circumstances are present here. To the contrary, the Courts ruling regarding the inequitable conduct claims against the Settlement Noteholders is a matter of serious and widespread public interest. That rulingunquestionably accurate and fully supported by the evidentiary recordhas had a significant impact in this proceeding, and has been addressed by numerous commentators. The Plan requirement that the Court simply sweep its ruling under the rug is nothing less then an assault upon the integrity of this Court and the bankruptcy process. So long as this condition remains, the Plan cannot be confirmed, and the Disclosure Statement and Plan accordingly should be rejected now to save the Debtors estates the time and expense of soliciting a vote that will ultimately prove futile. 3. Even if the Court were to defer this issue, the Disclosure Statement still must be

rejected. It is a cornerstone of the Bankruptcy Code that a disclosure statement must provide adequate information to enable stakeholders to make an informed judgment in voting to accept or reject the described plan. The Disclosure Statement does not meet this threshold. The Plan proposes to release all claims against the Settlement Noteholders relating to their inequitable conduct. But the Debtors provide no information in the Disclosure Statement regarding the value or strength of these claims. Without such information, no stakeholder can possibly make an informed judgment regarding the Plan, because it cannot know precisely what it is being asked to give up by agreeing to the releases contemplated therein. The Debtors indicate only that they, together with, inter alia, the Creditors Committee, the Equity Committee and, not surprisingly, the Settlement Noteholders themselves, believe that the Plan, and its contemplated
{D0216385.1 }

release of claims against the Settlement Noteholders, is in the best interests of all parties in interest and represent the most expeditious means for the Debtors to successfully emerge from the Chapter 11 Cases. (Disclosure Statement at 10.) These opinions, however, do not constitute adequate information under the Bankruptcy Code. BACKGROUND 4. On January 7, 2011, the Court denied confirmation of the Sixth Amended Plan

due to certain deficiencies. See In re Wash. Mut., Inc., 442 B.R. 314, 344-45, 365 (Bankr. D. Del. 2011). Among other things, the Court noted that [O]ne of the individual creditors who objected to the Plan, Mr. Thoma, sought to introduce evidence that the Settlement Noteholders used their position in the negotiations to gain nonpublic information about the Debtors which permitted them to trade in the Debtors debt. While the evidence was not admitted because it was hearsay, the Court is reluctant to approve any releases of the Settlement Noteholders in light of those allegations. Id. at 349. 5. In the wake of the Courts opinion, the Equity Committee and the TPS Group

sought discovery relating to the Settlement Noteholders trading in the Debtors securities. In the face of contentious opposition from the Settlement Noteholders, among others, the Court granted the Equity Committee and the TPS Group limited discovery on certain aspects of the Settlement Noteholders participation in global settlement negotiations and trading in the Debtors securities. 6. On July 13-15 and 18-21, 2011, this Court held a hearing to consider confirmation

of the Sixth Amended Joint Plan of Affiliated Debtors (the Modified Sixth Amended Plan). A substantial portion of those hearingsnearly four days in totalwere devoted to the allegations of inequitable conduct against the Settlement Noteholders in connection with their trading in the Debtors securities, and the Equity Committees related motion for standing to prosecute claims 4

{D0216385.1 }

against the Settlement Noteholders on the Debtors behalf (the Standing Motion). A representative of each of the Settlement Noteholders was examined, and more than 200 exhibits were introduced as evidence. As became apparent at the hearing, however, each of the Settlement Noteholders had withheld from production documents concerning their respective trading decisions, including trading models incorporating the terms of various settlement proposals to which they were privy. The Court held that the Settlement Noteholders representatives therefore were not permitted to testify as to the purported bases for their trading decisions. (See, e.g., July 20 Tr. at 224:21-226:16.) 7. The Court held closing arguments on August 24, 2011. On September 13, 2011,

the Court issued an opinion denying confirmation of the Modified Sixth Amended Plan. [Docket No. 8612 (as previously defined, the September 13 Opinion)]. The Court spent more than 30 pages of its opinion analyzing, in meticulous detail, the law governing insider trading and the evidence adduced against the Settlement Noteholders, and concluded that the Equity Committee and TPS Group have stated a colorable claim that the Settlement Noteholders engaged in insider trading. (September 13 Opinion at 137.) In several instances, the Court found that the Settlement Noteholders assertions were implausible. For example, the Court observed that it had substantial doubts regarding the Settlement Noteholders assertion that their attorneys did not provide them with material information regarding settlement negotiations after December 2009. (September 13 Opinion at 137.) The Court noted that [f]urther discovery on this issue, among others, was necessary. (Id.) Similarly, the Court noted that the Settlement Noteholders contention that settlement negotiations were dead in the spring of 2009 was belied by the fact that Centerbridge and Appaloosa engaged in their own separate negotiations with JPMC in July and August 2009. (Id. at 123.) The Court also noted that it was unconvinced by

{D0216385.1 }

Centerbridges explanations for why it restricted its trading during a portion of these negotiations. (Id. at 123 n.46.) 8. The Court further rejected the Settlement Noteholders contention that a finding

of insider trading would chill the participation of creditors in settlement discussions in bankruptcy cases of public companies. (Id.) Rather, the Court observed, creditors who want to participate in settlement discussions in which they receive material nonpublic information about the debtor must either restrict their trading or establish an ethical wall between traders and participants in the bankruptcy case. (Id. at 137-38.) 9. While the Court held that colorable claims against the Settlement Noteholders

existed, it directed that the parties go to mediation on this issue, as well as the issues that remain an impediment to confirmation of any plan or reorganization in this case. (Id. at 138-39.) On October 10, 2011, the Court appointed the Honorable Raymond Lyons as the mediator and ordered various parties, including the TPS Group, to participate in the mediation. [Docket No. 8780.] The mediation commenced on October 19, 2011. Despite this Courts order, the TPS Group was excluded from any substantive discussions during the mediation. According to the Debtors, the Plan is a result of that mediation. 10. On December 12, 2011, the Debtors filed the Disclosure Statement describing the

Plan. The Disclosure Statement and Plan are nothing short of astonishing. The Settlement Noteholders will not make any settlement payment, and none of their claims will be disallowed. They instead will receive full releases of all potential claims relating to their trading in the Debtors securities in exchange for no consideration at all. (Disclosure Statement at 188-90; Plan at 98-99 41.5 & 41.6.) Indeed, notwithstanding the Courts conclusion that the Debtors estates possess colorable inequitable conduct claims against the Settlement Noteholders, the Settlement Noteholders appear to have incurred no negative repercussions whatsoever in
{D0216385.1 }

connection with the Plan. In fact, the Plan contemplates that the Settlement Noteholders will make a secured loan (subject to various conditions) to the Reorganized Debtor at a 7 percent interest rate, and will receive the right to appoint a director to the board of directors of the Reorganized Debtor. (Disclosure Statement at 24-26.) Thus, rather than punishing the Settlement Noteholders for their inequitable conduct, the Plan proposes that the Settlement Noteholders become the principal lenders to the Reorganized Debtor and a fiduciary to the equity holders of the Reorganized Debtor. 11. Perhaps the most astonishing provision of the Plan, however, is the requirement

that this Court enter an order withdrawing and vacating for all purposes (a) the September Order to the extent relating to the Standing Motion and (b) those portions of the September Opinion relating to the Standing Motion, including, but not limited to, (i) Section III(H) of the September Opinion, pages 108 through 139, and (ii) the first sentence on page 68, footnote 31 on page 70 and the last paragraph of Section III(D) of the September Opinion, page 73. (Id.) These portions of the Courts opinion all relate to the Courts finding that the Equity Committee and TPS Group presented sufficient evidence to establish colorable claims against the Settlement Noteholders, as well as this Courts conclusion that creditors who receive confidential nonpublic information during settlement negotiations must either restrict trading or establish ethical walls to prevent the use of that information in trading decisions. 12. The Debtors and other Plan proponents provide no basis to vacate these portions

of the Courts September 13 Opinion. Neither the Disclosure Statement nor the Plan include any description of additional discovery provided by the Settlement Noteholders during the mediation processincluding discovery relating to the numerous open factual issues specifically noted by the Court in its September 13 Opinionthat would warrant vacatur. The evidence at the hearing on the Modified Sixth Amended Plan was clear, and fully supported the Courts ruling that 7

{D0216385.1 }

claims against the Settlement Noteholders for inequitable conduct should proceed. The Plan proponents have offered no facts to change this conclusion. ARGUMENT I. The Disclosure Statement Cannot Be Approved Because the Plan It Describes Is Patently Unconfirmable 13. It is well settled that a disclosure statement should not be approved where the

proposed plan is patently unconfirmable. In re Am. Capital Equip., Inc., 405 B.R. 415, 423 (Bankr. W.D. Pa. 2009); accord, e.g., In re Quigley Co., 377 B.R. 110, 115-16 (Bankr. S.D.N.Y. 2007) (If the plan is patently unconfirmable on its face, the [motion] to approve the disclosure statement must be denied, as solicitation of the vote would be futile.) (collecting cases); In re La Guardia Assocs., L.P., Nos. 04-34512 and 04-34514, 2006 WL 6601650, at *60 (Bankr. E.D. Pa. Sept. 13, 2006) (As a matter of law, it is well established that the Court should not approve a disclosure statement where the reorganization plan to which it relates is unconfirmable.) (citations omitted); In re Curtis Ctr. Ltd. Pship, 195 B.R. 631, 638 (Bankr. E.D. Pa. 1996)

). Indeed, [i]t has become standard Chapter 11 practice that when an objection raises substantive plan issues that are normally addressed at confirmation, it is proper to consider and rule upon such issues prior to confirmation, where the proposed plan is arguably unconfirmable on its face. In re Felicity Associates, Inc., 197 B.R. 12 (Bankr. D.R.I. 1996) (debtors request for approval of its disclosure statement denied where its proposed plan was unconfirmable on its face). 14. The purpose of this rule is to prevent the needless diminution in the value of the

estate irrespective of the adequacy of the information contained in the disclosure statement. A court therefore should disapprove of a disclosure statement, even if it properly summarizes and provides adequate information about a proposed plan, when a court is convinced that a plan
{D0216385.1 }

could not possibly be confirmed in order to spare the expense of mailing a disclosure statement and preparing for and participating in a confirmation hearing which may be for naught. In re Monroe Well Serv., Inc., 80 B.R. 324, 332-33 (Bankr. E.D. Pa. 1987) (citations omitted); see also La Guardia Assocs., 2006 WL 6601650, at *60 (explaining the purpose for this rule of law is to eliminate the wasteful and fruitless exercise of sending the disclosure statement to creditors and soliciting votes on a proposed plan, which cannot be confirmed); In re Allied Gaming Mgmt., Inc., 209 B.R. 201, 202 (Bankr. W.D. La. 1997) (the estate should not be burdened (both in terms of time and expense) with going through the printing, mailing, noticing, balloting, and other exercises in the confirmation process where inability to attain confirmation is a fait accompli). Indeed, under such circumstances, it is incumbent upon the Court to decline approval of the disclosure statement and prevent diminution of the estate. In re Pecht, 57 B.R. 137, 139 (Bankr. E.D. Va. 1986). 15. Here, the Plan is premised upon this Court withdrawing and vacating for all purposes (a) the September Order to the extent relating to the Standing Motion and (b) those portions of the September Opinion relating to the Standing Motion, including, but not limited to, (i) Section III(H) of the September Opinion, pages 108 through 139, and (ii) the first sentence on page 68, footnote 31 on page 70 and the last paragraph of Section III(D) of the September Opinion, page 73. (Plan at 90, 36.1(a)(11).) 16. This mandatory condition to confirmation dooms the Plan. A party cannot satisfy

its burden of demonstrating equitable entitlement to the extraordinary remedy of vacatur absent exceptional circumstances, which do not include the mere fact that the settlement agreement provides for vacatur. U.S. Bancorp Mortgage Co. v. Bonner Mall Pship, 513 U.S. 18, 29 (1994); see also Polymasc Pharms., PLC v. Alza Corp., No. Civ.A. 01-228-JJF, 2004 WL 633256, at *1 (D. Del. Mar. 26, 2004). As the Supreme Court has explained, [j]udicial 9

{D0216385.1 }

precedents are presumptively correct and valuable to the legal community as a whole. They are not merely the property of private litigants and should not stand unless a court concludes the public interest would be served by a vacatur. Bancorp, 513 U.S. at 26 (quotation marks and citation omitted). Thus, [t]o allow a party who steps off the statutory path [by settling] to employ a secondary remedy of vacatur as a refined form of collateral attack on the judgment wouldquite apart from any considerations of fairness to the partiesdisturb the orderly operation of the federal judicial system. Id. at 27. 17. As such, courts, including bankruptcy courts, routinely deny requests to vacate

their prior orders as a condition of settlement. See, e.g., In re Harrelson Utilities, Inc., No. 0902815-8-RDD, 2010 WL 4824419, at *1-3 (E.D.N.C. Nov. 22, 2010) (Just because a decision of this court is controversial or causes consternation, does not constitute an exceptional circumstance that would justify vacatur.); In re Hudson, 420 B.R. 73, 92 (Bankr. N.D.N.Y. 2009); Mahogany Run Condo. Assoc., Inc. v. ICG Realty Mgmt. Corp. (In re Icon Inv. Trust No. 1), 2004 Bankr. LEXIS 183, at *10 (Bankr. D. V.I. 2004) (parties are not free to agree to nullify a memorandum opinion and order of the court which set honorable precedent without appellate judicial review and determination) (emphasis in original); In re Admetric Biochem, Inc., 300 B.R. 141, 144-148 (Bankr. D. Mass. 2003) (denying settlement motion where settlement was conditioned upon entry of an order by the Court vacating its prior decision); In re Dow Corning Corp., No. 95-20512, 2002 WL 32151839, at *1 n.2 (E.D. Mich. Sept. 19, 2002) (denying parties request to vacate prior opinion in absence of exceptional circumstances); In re MeisNachtrab, 200 B.R. 170, 171 (Bankr. N.D. Ohio 1996) (same); In re Hiller, 179 B.R. 253, 25863 (Bankr. D. Colo. 1994). 18. The Debtors and other Plan proponents cannot possibly demonstrate that

exceptional circumstances warranting vacatur are present here. In fact, vacatur would not serve
{D0216385.1 }

10

the public interest, but rather would subvert it. The decision in In re Hudson, is instructive in this regard. In that case, the bankruptcy court had denied the debtors motion to discharge pursuant to 727(a)(4)(A) because the debtor had fraudulently omitted certain assets from his petition. After the bankruptcy court entered its order denying discharge, the debtor reached a private settlement with his creditors. The debtor thereafter moved to vacate the bankruptcy courts prior order denying him discharge. Relying on Bancorp, the bankruptcy court denied the debtors motion. In re Hudson, 420 B.R. at 92. In doing so, it rejected the proposition that judicial findings of fraud and bad faith . . . may be negotiated away as though they were little more than advisory statements. Id. It further stated that [a]llowing such a transaction would be tantamount to horse trading of discharges, and completely transform the court from an arbiter of justice into a marketplace of justice. The court cannot sanction this abuse of the system or the threat it engenders to the finality of judgments and proper functioning of the justice system. . . . Id. 19. Vacatur is inappropriate here for the same reasons. Just as the debtor in In re

Hudson sought to negotiate away a prior order of the court, so too here the Debtors and other Plan proponents (including the Settlement Noteholders) seek nothing less than to whitewash this Courts finding that there exist colorable claims against the Settlement Noteholders for inequitable conduct relating to their trading in the Debtors securities. In fact, the Plan proponents here would go even further than the debtor in Hudson. The portion of the September 13 Opinion that they demand this Court vacate includes not only the Courts finding that the Debtors estates possessed colorable claims against the Settlement Noteholders; it also includes this Courts finding that creditors who want to participate in settlement discussions in which they receive material nonpublic information about the debtor must either restrict their trading or establish an ethical wall between traders and participants in the bankruptcy case. [Docket No.
{D0216385.1 }

11

8612 at 138-39.] The Plan proponents thus would purport to instruct this Court not only to recant its detailed findings as to the claims against the Settlement Noteholders specifically, but also purge the judicial precedent preventing these same hedge funds from freely trading in the securities of other debtors while also participating in confidential settlement negotiations. As in Hudson, such a result would make a mockery of this Courts prior ruling, undermine the finality of court orders, and completely transform the court from an arbiter of justice into a marketplace of justice. In re Hudson, 420 B.R. at 92. Such a result should not be countenanced, and renders the Plan unconfirmable on its face. II. The Disclosure Statement Cannot Be Approved Because It Does Not Provide Stakeholders With Adequate Information To Make an Informed Judgment About the Plan 20. Even if this Court were to decline to consider the substance of the Plan at this

juncture, the Disclosure Statement still should not be approved. The Debtors cannot solicit acceptance or rejection of the Plan unless they first provide stakeholders with a disclosure statement containing adequate information regarding the Plan. 11 U.S.C. 1125(b). Adequate information is defined under the Code as information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtors books and records . . . that would enable . . . a hypothetical investor of the relevant class to make an informed judgment about the plan . . . Id. 1125(a)(1). 21. The importance of a disclosure statement with adequate information cannot be

understated. As the Third Circuit has observed, [t]he preparing and filing of a disclosure statement is a critical step in the reorganization of a Chapter 11 debtor. . . . The importance of full disclosure is underlaid by the reliance placed upon the disclosure statement by the creditors and the court. Given this reliance, we cannot overemphasize the debtors obligation to provide sufficient data to satisfy the Code standard of adequate information. Oneida Motor Freight, 12

{D0216385.1 }

Inc. v. United Jersey Bank, 848 F.2d 414, 417 (3d Cir. 1988), cert. denied, 488 U.S. 967 (1988). See also In re Scioto Valley Mortg. Co., 88 B.R. 168, 170 (Bankr. S.D. Ohio 1988) (The disclosure statement was intended by Congress to be the primary source of information upon which creditors and shareholders could rely in making an informed judgment about a plan of reorganization.). Thus, [w]here a disclosure statement does not include information sufficient to allow parties voting on the plan the opportunity to arrive at an independent and informed judgment, the disclosure statement cannot be approved. In re East Redley Corp., 16 B.R. 429, 430 (Bankr. E.D. Pa. 1982). 22. It is well settled that a disclosure statement must include information regarding

the value of claims proposed to be released under the plan. See, e.g., In re Source Enters. Inc., et al., No. 06-11707 (AJG), 2007 WL 2455182, at *8 (Bankr. S.D.N.Y. Aug. 23, 2007) (ordering debtors to amend their disclosure statement to state, inter alia, their view with respect to the value of causes of action being released under the plan); Westland Oil Dev. Corp. v. MCorp Mgmt. Solutions, Inc., 157 B.R. 100 (Bankr. S.D. Tex. 1993) (holding debtor was obligated in its disclosure statement to estimate value of claim and observing that [t]he code requires adequate disclosure, not selective disclosure). 23. It is equally axiomatic that a disclosure statement also must include information

regarding the merits and strength of the claims to be released. See, e.g., In re Murphy, No. 88 2449C, 1990 WL 10593982, at *1 (Bankr. S.D. Iowa June 1, 1990) (disclosure statement rejected after complaints of lack of information regarding settlement). Indeed, bankruptcy courts cannot approve the settlement of claims in the absence of evidence justifying the settlement. See, e.g., In re Barone, 2011 Bankr. LEXIS 1267, at *3 (Bankr. M.D. Pa. Apr. 11, 2011) (rejecting proposed settlement in absence of supporting evidence); In Re Wiley, No. 70713053 SL, 2010 WL 964082, at *4-5 (Bankr. D.N.M. Mar. 11, 2010) (court cannot find that it has
{D0216385.1 }

13

sufficient information on whether to approve the compromise or not). It therefore goes without saying that creditors cannot make an informed judgment regarding whether a settlement contained in a plan is in their best interests unless they are provided similar information. Cf. In re Apply 2 Save, Inc., No. 0920607TLM, 2011 WL 1363771, at *2 (Bankr. D. Id. April 11, 2011) (refusing to seal evidence submitted in support of settlement because [o]ne of the factors to be considered . . . is a proper deference to the views of creditors of the estate as to the suggested settlement. One must wonder how creditors can even form those views in the absence of information due to a sealed factual record.). 24. Here, the Debtors, Creditors Committee and Equity Committee propose to

release the Settlement Noteholders, among others, from all claims relating to trading in the Debtors securities at any time from the Petition Date through the Effective Date, including any claims for equitable disallowance. The only conceivable support for these releases is the following disclosure: the Debtors, the Creditors Committee, the Equity Committee, AAOC and other Creditor constituencies . . . believe that the Seventh Amended Plan and the terms embodied therein are in the best interests of all parties in interest and represent the most expeditious means for the Debtors to successfully emerge from the Chapter 11 Cases. (Disclosure Statement at 10.) It is well established, however, that opinions without factual support are not proper content of a disclosure statement and do not provide the parties voting on the plan with adequate information. In re East Redley Corp., 16 B.R. at 430. 25. The Disclosure Statement is bereft of any such factual support. The Debtors

provide no information, for example, as to (i) the potential value of these colorable claims to the Debtors estates; (ii) the likelihood of success that the Debtors assign to these claims, and the basis for that assessment; (iii) what steps (if any) the Debtors or other Plan proponents have taken, in the wake of this Courts September 13 Opinion, to investigate these claims; (iv) what
{D0216385.1 }

14

facts and evidence (if any) inform the settlement with and release of claims against the Settlement Noteholders as contemplated in the Plan; (v) the Settlement Noteholders trading profits during the time periods in which they traded while in possession of confidential settlement information, which would be relevant to any disgorgement remedy available against them; (vi) the profits these entities stand to make if the Plan is confirmed; or (vii) most critically, how claims against the Settlement Noteholders, if successful, would effect the recoveries of other stakeholders. Without this information, stakeholders have no basis to determine the value or merit of the claims they are being asked to forego by voting in favor of the Plan, and therefore cannot possibly make an informed decision with respect to the Plan. The Disclosure Statement should not be approved. RESERVATION OF RIGHTS 26. The TPS Group expressly reserves all of its rights to object to the Plan and/or the

Disclosure Statement on any grounds, including without limitation by joining in the objections of other parties, regardless of whether those grounds are addressed herein. WHEREFORE, the TPS Group respectfully requests that the Court (i) deny the Motion and (ii) grant such other and further relief as it deems just and proper.

{D0216385.1 }

15

Dated: Wilmington, Delaware January 4, 2012 Respectfully submitted, CAMPBELL & LEVINE LLC /s/ Mark T. Hurford Marla Rosoff Eskin, Esq. (DE 2989) Bernard G. Conaway, Esq. (DE 2856) Mark T. Hurford, Esq. (DE 3299) Kathleen Campbell Davis, Esq. (DE 4229) 800 North King Street, Suite 300 Wilmington, DE 19809 Telephone: (302) 426-1900 Facsimile: (302) 426-9947 meskin@camlev.com bconaway@camlev.com mhurford@camlev.com kdavis@camlev.com - and ARKIN KAPLAN RICE LLP Howard J. Kaplan, Esq. Joseph Matteo, Esq. Deana Davidian, Esq. 590 Madison Avenue New York, NY 10022 Telephone: (212) 333-0200 Facsimile: (212) 333-2350 Counsel for the TPS Group

{D0216385.1 }

16

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________________ In re: ) ) WASHINGTON MUTUAL, INC., et al., ) ) Debtors ) ) ) CERTIFICATE OF SERVICE I, Mark T. Hurford, of Campbell & Levine, LLC, hereby certify that on January 4, 2012, I caused a copy of the Objection of the TPS Group to Debtors Motion for Approval of Disclosure Statement for the Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code to be served upon the attached service list via First Class U.S. Mail.

Chapter 11 Case No. 08-12229 (MFW) Jointly Administered

Dated: January 4, 2012 /s/ Mark T. Hurford Mark T. Hurford (No. 3299)

{D0205532.1 }

In re: Washington Mutual, Inc., et al 08-12229 Service List

Mark David Collins, Esquire Richards, Layton & Finger, PA One Rodney Square 920 N. King Street Wilmington, DE 19801

Adam G. Landis, Esquire Landis Rath & Cobb LLP 919 Market Street, Suite 1800 P.O. Box 2087 Wilmington, DE 19899

Peter Calamari, Esquire Quinn Emanual Urquhart & Sullivan, LLP 55 Madison Avenue, 22nd Floor New York, NY 10010

David B. Stratton, Esquire Pepper Hamilton LLP 1313 N. Market Street, Suite 5100 P.O. Box 1709 Wilmington, DE 19899-1709

Fred S. Hodara, Esquire Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, NY 10036-6745

Brian Rosen, Esquire Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153

Robert A. Sacks, Esquire Sullivan & Cromwell LLP

125 Broad Street New York, NY 10004

Thomas R. Califano, Esq. DLA Piper LLP (US) 1251 Avenue of the Americas New York, NY 10020

Charles Edward Smith, Esquire Washington Mutual, Inc. 925 Fourth Avenue Seattle, Washington 98104

{D0216381.1 }

Jane Leamy, Esquire Office of the U.S. Trustee for the District of Delaware 844 King Street, Suite 2207, Lockbox 35 Wilmington, Delaware 19899-0035

Neil R. Lapinski, Esquire Elliott Greenleaf 1105 Market Street, Suite 1700 Wilmington, Delaware 19801

William P. Bowden, Esquire Ashby & Geddes, P.A. 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, DE 19899

M. Blake Cleary, Esquire Young Conaway Stargatt & Taylor, LLP 1000 West Street, 17th Floor Wilmington, DE 19801

Edgar G. Sargent, Esquire Susan Godfrey LLP 1201 Third Avenue, Suite 3800 Seattle, Washington 98101

{D0216381.1 }