Case MFW Doc 162 Filed 06/03/16 Page 1 of 42

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1 Case MFW Doc 162 Filed 06/03/16 Page 1 of 42 Page 1 1 UNITED STATES BANKRUPTCY COURT 2 DISTRICT OF DELAWARE In re: : : Chapter 11 6 WASHINGTON MUTUAL, INC., : : Case No : Debtors. : (Jointly Administered) X : 9 : WMI LIQUIDATING TRUST, : 10 : Plaintiff, : 11 : v. : X ANTHONY BOZZUTI, : Adv. Proc. No X CHANDAN SHARMA, : Adv. Proc. No X EDWARD F. BACH, : Adv. Proc. No X HENRY J. BERENS, : Adv. Proc. No X JOHN M. BROWNING, : Adv. Proc. No X KEITH O. FUKUI, : Adv. Proc. No X MARC MALONE, : Adv. Proc. No X MICHAEL R. ZARRO, : Adv. Proc. No X RACHEL M. MILEUR a/k/a : Adv. Proc. No RACHELLE M. MILEUR, : X 22 THOMAS E. MORGAN, : Adv. Proc. No X 23 ANN TIERNEY, : Adv. Proc. No X 24 TODD H. BAKER, : Adv. Proc. No X 25 GENNADIY DARAKHOVSKIY : Adv. Proc. No

2 Case MFW Doc 162 Filed 06/03/16 Page 2 of 42 Page X ROBERT BJORKLUND, DARYL DAVID,: Adv. Proc. No DEBORA HORVATH, JEFFREY JONES,: JOHN MCMURRAY, : 3 MICHAEL REYNOLDSON, : DAVID SCHNEIDER, BRUCE ALAN : 4 WEBER, AND JEFFREY WEINSTEIN, : X United States Bankruptcy Court North Market Street 10 Wilmington, Delaware June 2, :30 a.m. 11:23 a.m B E F O R E : 22 HON MARY F. WALRATH 23 U.S. BANKRUPTCY JUDGE ECRO OPERATOR: BRANDON MCCARTHY

3 Case MFW Doc 162 Filed 06/03/16 Page 3 of 42 Page 3 1 HEARING re Omnibus Transcribed by: Sonya Ledanski Hyde

4 Case MFW Doc 162 Filed 06/03/16 Page 4 of 42 Page 4 1 A P P E A R A N C E S : 2 3 RICHARDS, LAYTON & FINGER 4 Attorneys for WMILT 5 6 BY: AMANDA R. STEELE 7 8 WEIL, GOTSHAL & MANGES LLP 9 Attorneys for WMILT BY: BRIAN ROSEN SULLIVAN & CROMWELL 14 Attorneys for JP Morgan BY: BRIAN GLUECKSTEIN LANDIS, RATH & COBB 19 Attorneys for JP Morgan BY: MATTHEW MCGUIRE

5 Case MFW Doc 162 Filed 06/03/16 Page 5 of 42 Page 5 1 CIARDI, CIARDI & ASTIN 2 Attorneys for Steven Rosenbaum and Litigation 3 Tracking Warrant Holders 4 5 BY: JACK MCLAUGHLIN 6 7 NIX, PATTERSON & ROACH 8 Attorneys for Steven Rosenbaum and Litigation 9 Tracking Warrant Holders BY: AUSTIN TIGHE ALSO PRESENT TELEPHONICALLY: 14 BRAD CHRISTENSEN 15 ROBYN B. SOKOL 16 ANDREW H. WINETROUB

6 Case MFW Doc 162 Filed 06/03/16 Page 6 of 42 Page 6 1 P R O C E E D I N G S 2 THE COURT: Good morning. 3 MR. GLUECKSTEIN: Good morning, Your Honor. For 4 the record, Brian Glueckstein from Sullivan & Cromwell on 5 behalf of JPMorgan Chase. 6 Your Honor, we are here today with respect to 7 JPMorgan's motion for an Order from this Court enforcing the 8 terms of the Court's Confirmation Order in these cases that 9 became final more than four years ago. JPMorgan requires 10 the assistance of this Court because certain holders of 11 litigation tracking aren't, are pursuing recycled litigation 12 claims now against JPMorgan in a new action in Federal 13 District Court in Ohio, premised on failed arguments before 14 Your Honor, that they own a vested property interest to percent of the Anchor litigation judgment. 16 Your Honor, we submit that Plaintiff's Complaint 17 violates the Court's Confirmation Order because it seeks to 18 impose liability on JPMorgan for contractual rights that the 19 holders had, if at all, against WMI that were extinguished 20 in accordance with the Debtor's confirmed plan of 21 reorganization. The claims asserted were never filed 22 against JPMorgan because they relate to obligations arising 23 out of the litigation tracking warrant agreement with WMI, 24 and those obligations were never assumed by JPMorgan Chase. 25 As recently as two days ago, Plaintiff's filed an

7 Case MFW Doc 162 Filed 06/03/16 Page 7 of 42 1 opposition to JPMorgan's motion to stay the Ohio action 2 pending a decision from this Court on the pending motion. 3 Plaintiff's blatant disregard for the terms of the 4 Confirmation Order provides cause to enter the proposed 5 Order and, in our view, award JPMorgan its fees. 6 And, Your Honor, the reason why this is so clear 7 is that Paragraph 16 of the Court's Confirmation Order 8 ordered that JPMorgan shall be transferred the Anchor 9 litigation, which is one of the plan contribution assets, as 10 defined in the global settlement agreement, free and clear 11 of all claims, encumbrances, and interests pursuant to 12 Section 363 of the Bankruptcy Code. 13 The only exception provided for is for allowed 14 JPMC assumed liability claims, as that is defined in the 15 plan and the global settlement agreement, which are limited 16 to certain limited liabilities that were expressly assumed 17 by JPMorgan in the global settlement. The free and clear 18 nature of that transfer is dispositive in precluding any 19 claims against JPMorgan for rights arising as holders of 20 LTWs pursuant to the warrant agreement. 21 If that were not enough, the Confirmation Order 22 that Your Honor entered also expressly approved the global 23 settlement agreement itself and recognized it as an integral 24 foundation to Debtor's plan of reorganization. Section (b) of the global settlement expressly disclaims any Page 7

8 Case MFW Doc 162 Filed 06/03/16 Page 8 of 42 1 obligation to the LTW holders and removes any argument that 2 obligations to the LTW holders could somehow have been 3 assumed by JPMorgan. Section 2.13(b) states that JPMorgan 4 received the Anchor litigation free and clear, "including, 5 without limitation, any liens, claims, interest, and 6 encumbrances of holders of litigation tracking warrants as 7 set forth in the 2003 amended and restated warrant 8 agreement." 9 The plain language of the Confirmation Order and 10 the global settlement leave no room to argue that JPMorgan 11 could ever have had liability relating to the LTWs. The 12 transfer of the Anchor litigation free and clear of any 13 interest of the holders, pursuant to 363(f) of the 14 Bankruptcy Code, was a litigated issue before this Court, 15 and following trial expressly approved, in connection with 16 the Court's first confirmation decision in these cases. The 17 Court overruled numerous objections to the global settlement 18 agreement, including objections of certain LTW holders, and 19 concluded that the Debtors may sell the Anchor litigation 20 free and clear of the claims of the LTW holders expressly 21 citing Section 363(f)(4). 22 Plaintiff's objection filed in response to this 23 motion does not even mention Section 363, never mind attempt 24 to contest JPMorgan's analysis of the effect of those Page 8 25 findings in the Confirmation Order. JPMorgan does not now

9 Case MFW Doc 162 Filed 06/03/16 Page 9 of 42 1 have, and has never had, any liability to holders of the 2 litigation tracking warrants. The approval of the global 3 settlement and the provisions of the Confirmation Order 4 cannot be collaterally attacked through new litigation in 5 Ohio, which is precisely what the Plaintiffs seek to do. 6 Your Honor, we would submit that the Court need go 7 no further than this to grant JPMorgan's motion. But, of 8 course, as Your Honor is well aware, there is more to the 9 story before this Court of the litigation tracking warrants. 10 As the Court is well aware, the Ohio Plaintiffs here, as 11 purported litigation tracking warrant holders, were members 12 of a non-opt out class that litigated and lost before this 13 Court the substantive argument that is the basis for their 14 new Complaint against JPMorgan, that the LTW holders have a 15 vested interest to 85 percent of the Anchor litigation 16 itself. 17 That issue was conclusively determined in an 18 adversary proceeding before Your Honor on a complete record 19 following trial where numerous witnesses, including the 20 drafters of the LTWs, testified. The Court determined that 21 the LTWs do not hold -- do not entitle holders to an 22 interest in the Anchor litigation itself. Based on that 23 determination, the Court concluded that the Anchor 24 litigation was property of the Debtor's estate that, "may be 25 conveyed by WMI to JPMorgan as part of the global Page 9

10 Case MFW Doc 162 Filed 06/03/16 Page 10 of 42 1 settlement, pursuant to Section 363 of the Bankruptcy Code." 2 Plaintiffs here now want to act like none of this 3 ever happened, and that somehow it is now open season on 4 JPMorgan on these very issues, because these particular LTW 5 holders declined to give JPMorgan a third-party release 6 under the claim. We submit, Your Honor, that Plaintiff's 7 arguments in that regard are irrelevant to the issue before 8 the Court. 9 We address the arguments raised by Plaintiff's 10 objection in detail in our reply brief submitted to the 11 Court, but I wanted to briefly touch on just three points 12 for the record today. First, this Court plainly has 13 jurisdiction to decide this motion. Plaintiffs may have 14 made much noise, both in their objection filed here and in 15 Ohio, that this Court lacks jurisdiction. That is 16 incorrect. It cannot seriously be disputed that the Court 17 has jurisdiction as recognized by the Supreme Court in 18 Traveler's to interpret and enforce its own prior Orders. 19 The focus of the jurisdictional inquiry is not on 20 the Plaintiff's claims, but the relief requested by JPMorgan 21 in the motion, which is enforcement of the Court's 22 Confirmation Order. Enforcement of a Confirmation Order, as 23 with any Court Order, gives rise to a rising in jurisdiction 24 under 28 U.S.C. Section 1334(b). 25 Furthermore, Your Honor, this Court expressly Page 10

11 Case MFW Doc 162 Filed 06/03/16 Page 11 of 42 1 retained exclusive jurisdiction in the Confirmation Order 2 and in the plan, specifically including with respect to 3 enforcement of the plan and the global settlement agreement. 4 THE COURT: Well, just because my Order said I had 5 exclusive jurisdiction doesn't mean I do have exclusive 6 jurisdiction. 7 MR. GLUECKSTEIN: Understood, Your Honor. 8 THE COURT: How can I deprive other Courts of 9 jurisdiction? 10 MR. GLUECKSTEIN: Understood, Your Honor. And 11 that's THE COURT: So stop putting that in Confirmation 13 Orders. 14 MR. GLUECKSTEIN: That's fair, but I think the 15 argument here before the Court is plaintiffs are submitting 16 that there is no jurisdiction under And, really, the 17 issue that I'm addressing here is that you do, by nature of 18 the request to enforce rule. 19 Second, Your Honor, the second point I'd like to 20 make in response to the Plaintiff's opposition is this issue 21 of their focus on the releases. Plaintiff's central 22 argument is that they did not provide JPMorgan the third- 23 party release in Section 41.6 of the plan and so, therefore, 24 their claims are viable. 25 The issue here, Your Honor, is not whether Page 11

12 Case MFW Doc 162 Filed 06/03/16 Page 12 of 42 1 JPMorgan received a broad third-party release from these 2 claims. To be clear, we are not asserting that the causes 3 of action alleged in the Complaint are barred due to the 4 plan release provided in Section The issue instead is 5 whether the particular claims at issue, ownership in the 6 Anchor litigation arising from purported rights in the LTW 7 warrant agreement, were ever assumed by JPMorgan in the 8 first place. 9 Plaintiffs are not asserting direct claims that 10 they have against JPMorgan. They're asserting rights that 11 they had against WMI under the warrant agreement that they 12 believe follow the Anchor litigation to JPMorgan. The 13 Confirmation Order, separate and apart from the plan 14 release, is clear that JPMorgan never assumed those 15 obligations. The 363 sale and settlement, as provided for 16 in the global settlement agreement as approved in the 17 Confirmation Order and, along with the 363(f) findings in 18 Paragraph 16, preclude the Plaintiffs from bringing the 19 Complaint. 20 Third, Your Honor, JPMorgan's position has been 21 consistent and unwavering that the LTW holders have no Page possible claims against JPMorgan. Plaintiffs spend much of 23 their objection cherry picking out-of-context comments made 24 by Your Honor, class counsel in the adversary proceeding, 25 and counsel for Anchor in the underlying Anchor litigation,

13 Case MFW Doc 162 Filed 06/03/16 Page 13 of 42 1 to argue that somehow their right to pursue the Complaint in 2 Ohio has been expressly recognized. 3 We detail this in our reply brief that Plaintiffs 4 are flatly wrong. The discussion of the motion to intervene 5 in the underlying Anchor litigation highlights the point. 6 Their Anchor argument that intervention was inappropriate, 7 primarily because the LTW holders have no possible claim 8 against JPMorgan, and there was extensive discussion before 9 that Court of Your Honor's decision with respect to the 10 rights of the LTW holders. JPMorgan did go on to discuss 11 that even if such a claim did exist, it would have to be 12 brought outside the Court of Federal Claims due to the 13 limited jurisdiction of that Court. 14 Contrary to Plaintiff's argument here, neither 15 Anchor nor JPMorgan ever conceded that any such claims would 16 be viable, or that any Court that the interveners there 17 chose to pursue them in would appropriately have 18 jurisdiction. All Anchor said is that any such hypothetical 19 claims would have to be brought in a Court, other than the 20 Court of Federal Claims. 21 Similarly, Your Honor's statement at the LTW 22 settlement hearing that nobody was required to provide Page JPMorgan a release did not include a statement that claims 24 relating to the LTWs against JPMorgan were otherwise viable. 25 While the LTW settlement with the Debtors itself did not

14 Case MFW Doc 162 Filed 06/03/16 Page 14 of 42 Page 14 1 affect claims against JPMorgan, the plan, the global 2 settlement, and the Confirmation Order necessarily did. And 3 that's because any obligations related to the litigation 4 tracking warrants were left with the WMI estates through the sale. 6 In fact, the transcript from that hearing in 7 February of 2012 during the same discussion approving the 8 LTW settlement, the Court noted that the Anchor litigation 9 was being sold to JPMorgan under the global settlement as 10 implemented by the Debtor's plan. 11 The Confirmation Order provides that JPMorgan is 12 entitled to the protections of 363(f) of the Bankruptcy 13 Code, and there is nothing in the record before the Court to 14 suggest that JPMorgan ever waivered on its lack of 15 assumption of those obligations. 16 Finally, Your Honor, despite all of this which we 17 have laid out to the Plaintiffs, the Claimants continue to 18 pursue the Complaint in Ohio. We have, prior to filing this 19 motion with Your Honor, demanded that the Plaintiffs 20 withdraw the Complaint. Plaintiffs refused. Plaintiffs 21 have moved to stay the Ohio action to allow this Court to 22 rule. Before litigation there proceeds, Plaintiffs have 23 filed an opposition even to that, all along requiring 24 JPMorgan to incur attorneys' fees and expenses in Ohio and 25 in having to file and pursue this motion here. As discussed

15 Case MFW Doc 162 Filed 06/03/16 Page 15 of 42 Page 15 1 in our papers, Your Honor, we submit that under the 2 circumstances, the elements for sanctions is met and that 3 JPMorgan should be awarded its attorneys' fees and expenses. 4 Your Honor, we submit that the motion should be 5 granted and our proposed Order entered. And with that, I'm 6 happy to answer any questions the Court may have. 7 THE COURT: No, thank you. 8 MR. GLUECKSTEIN: Thank you. 9 MR. McLAUGHLIN: Good morning, Your Honor. 10 THE COURT: Good morning. 11 MR. McLAUGHLIN: For the record, Jack McLaughlin 12 of Ciardi Ciardi & Astin, on behalf of Stephen Rosenbaum and 13 nine other litigation tracking warrant holders in this case. 14 Your Honor, with me this morning is Austin Tighe, 15 Esquire, of the firm of Nix, Patterson & Roach in Austin, 16 Texas. Mr. Tighe is counsel in the Ohio case as well, and 17 is really the subject matter expert in terms of that aspect 18 of it. I will be addressing the procedural aspects, and 19 we'd like to kind of tag team that way. 20 THE COURT: That's fine. 21 MR. McLAUGHLIN: Your Honor, needless to say, we 22 take a slightly different view than does JPMorgan. We view 23 this as really a test of civil procedure, as opposed to 24 substance of bankruptcy law and the interpretation of post- 25 confirmation plans.

16 Case MFW Doc 162 Filed 06/03/16 Page 16 of 42 1 The lawsuit filed in the U.S. District for the 2 Southern District of Ohio alleges 11 different causes of 3 action, some of which are contract-based, some of which are 4 tort, many of which would not fall under the purview of the sale order. 6 THE COURT: You think that 363 does not sell free 7 and clear of tort claims; is that what you're suggesting? 8 MR. McLAUGHLIN: Possibly, yes, Your Honor. 9 THE COURT: Is there any case law to that effect? 10 MR. McLAUGHLIN: I don't have it right at the tip 11 of my fingers. But the first cause of action alleged in 12 Ohio is based upon the assignment -- I'm sorry, the PAA, the 13 original agreement entered into between JPMorgan and the 14 FDIC that was dated September 25, 2008, the day before the 15 petition. So the question is whether or not that PPA is 16 subsumed in the 363 Order. 17 One of the issues that I don't think has ever been 18 addressed by this Court is this: If, in fact, the transfer 19 occurred for the litigation, the Anchor litigation, on 20 September 25th, as was originally asserted by JPMorgan, then 21 that would have occurred prepetition, so the 363 language 22 could not give it that indult. Only post-petition transfers 23 could be covered by that. It's an issue, but I don't think 24 the Court has ever addressed whether or not it can be Page essentially nunc pro tunc 363 relief. The transfer occurred

17 Case MFW Doc 162 Filed 06/03/16 Page 17 of 42 Page 17 1 one day beforehand. 2 I understand the global settlement that the Court 3 and that the parties stipulated deem the transfer to occur 4 at some point in time post-confirmation. But, again, we 5 suggest that's not dispositive if the litigation tracking 6 warrant holders wish to pursue a claim based in tort based 7 upon a prepetition transfer, then they should be permitted 8 to do that. 9 We're not asking -- let me backtrack a little bit. 10 We're not asking that the Ohio District Court re-litigate 11 anything that this Court has determined. Your Orders, your 12 opinions are final and not appealable and they say what they 13 say. The question is whether or not they apply to the 14 specific causes of action and facts that are raised in the 15 Ohio Complaint. Like I said, there are 11 separate counts. 16 They're set forth in our papers. I can go over them if you 17 want, but the bottom line is, they sound both in tort and 18 contract. 19 If, in fact, the Court -- if the Court -- JPMorgan 20 is asking this Court to rule that they're all completely 21 knocked out of the box by virtue of the Confirmation Order 22 and the 363 language as contained in the Confirmation Order. 23 And we would suggest that that's a little bit too broad a 24 brush for JPMorgan to ask the Court to paint with. If they 25 want to challenge each and every one of the causes of action

18 Case MFW Doc 162 Filed 06/03/16 Page 18 of 42 Page 18 1 stating that that cause of action is barred by the 2 confirmation plan and 363 relief contained therein, then 3 they should be permitted to do that. 4 Right now before you, Your Honor, is a motion 5 essentially to hold us in contempt. It's not the Complaint 6 itself, and we have to be careful not to conflate the two. 7 For JPMorgan to say, well, the whole thing is barred, that's 8 way too overbroad. We suggest that this Court would have to 9 go -- or any court would have to go count by count by count 10 and find that the Confirmation Order and the 363 language 11 and anything else in the plan would bar that -- would not 12 bar that particular cause of action. And, again, those are 13 not before you today. 14 Respectfully, we suggest that this is -- we've 15 been accused of forum shopping here for years after the 16 fact. In effect, this motion filed by JPMorgan is another 17 version of forum shopping. This cause of action, this 18 Complaint was filed in an Article III Court in Ohio. If 19 they believe that the causes are action are barred by this 20 Court's rulings, it would have been more simple and, in 21 effect, the cheapest for them to file a motion to dismiss. 22 Instead, they come to this Court and sought basically a 23 contempt order and to hold us -- to sanction us to the 24 extent of attorneys' fees. 25 For some reason, they're desperate to stay in this

19 Case MFW Doc 162 Filed 06/03/16 Page 19 of 42 1 Court, rather than resolve everything -- and here's the 2 problem. Let's worst case scenario, okay. We're here 3 essentially on a contempt motion. You find us in contempt, 4 right? We have a right to purge our contempt within a 5 certain period of time before sanctions can be imposed. So 6 whether we do -- again, (indiscernible), I'm not admitting 7 we're wrong, but if we have purged it, what do we do? Do we 8 go back to Ohio and do we voluntarily dismiss the case under 9 Rule 41? If so, what happens to all of our tort claims that 10 may or may not have been covered by the 363 Order -- I'm 11 sorry, the Confirmation Order. 12 We have asked for jury trials on the counts that 13 are triable by jury. That's something we couldn't get here. 14 If we dismiss, do we have a right then to come into this 15 Court and file an adversary proceeding, a post-confirmation 16 adversary proceeding? We would suggest that the Court's 17 jurisdiction over that, in terms of subject matter 18 jurisdiction related to or arising in, would be pretty 19 slender and we would be back -- in our papers, we've 20 discussed the jurisdictional nexus here. We've discussed 21 the potential of abstention. Page Unfortunately, while we think those concepts apply 23 today, there's really nothing for you to abstain from. I 24 mean, we have a cause of action out there. So essentially, 25 they're asking you to enjoin us, I guess, to dismiss that

20 Case MFW Doc 162 Filed 06/03/16 Page 20 of 42 1 action or to enjoin the U.S. District Court in Ohio from 2 hearing that. Either way, it's a very procedurally complex 3 matter. 4 We would suggest the better way to handle is this: 5 Deny this motion without prejudice; let everybody go back to 6 the District Court in Ohio; let them file a motion to 7 dismiss if they believe, in fact, that each and every one of 8 the causes of actions is defective, or for as many as they 9 think are defective. The U.S. District Court judge out 10 there is more than capable of reading your opinions and your 11 Orders and interpreting them. In fact, I think you have an 12 opinion at some point where you've acknowledged that non- 13 bankruptcy judges, while they may not have bankruptcy 14 expertise, can, in fact, interpret Orders with a fair degree 15 of accuracy. I would suggest to you that that would be the 16 case here. 17 If the judge out there agrees that everything 18 you've already determined -- and, again, we're not asking 19 them to re-litigate anything or determine -- then he throws 20 us out on the street and that's the end of it. However, if 21 the Debtor, they find THE COURT: Well, then they can come back here and 23 ask for sanctions MR. McLAUGHLIN: Yes, Your Honor. 25 THE COURT: -- you're suggesting. Page 20

21 Case MFW Doc 162 Filed 06/03/16 Page 21 of 42 1 MR. McLAUGHLIN: In fact, they can even ask for 2 sanctions there. I mean, if they believe that the 3 litigation was brought, you know, in bad faith or in 4 violation of Rule 11 or anything else; even, of course, 5 there's the good old 28 U.S. Code Section 1927, give me 6 fees. All this can be dealt with in a nice neat package in 7 Columbus, Ohio, which is a lovely town. I drove through 8 there yesterday. 9 There's no need to get this Court involved in this 10 sort of complicated factual litigation four years after the 11 fact. We've got litigation between non-debtors and other 12 non-debtors over a piece of litigation that even if JPMorgan 13 prevails, it's not going to put a dime back into the pockets 14 of the creditors. It doesn't affect the administration of a 15 bankruptcy case four years post-confirmation. It's just 16 essentially an irrelevancy to the bankruptcy estate. 17 So we would suggest that notwithstanding 18 JPMorgan's argument that this is a violation of the Order, 19 that the Court at least defer ruling on that to some later 20 time. Let the District Court rule on the specifics of each 21 of the causes of action. And, again, if the District Court 22 believes that each of them is barred by your prior opinions 23 and Orders, then it's going to be a real short case. But if 24 not, then that's the appropriate court to pursue it in Page because it's a Court of General Jurisdiction, they can have

22 Case MFW Doc 162 Filed 06/03/16 Page 22 of 42 1 the jury trial if they want it, and they can get this thing 2 resolved in a direct fashion, rather than a roundabout short 3 stopping of the matter by trying to get the Bankruptcy Court 4 to tell us that we're bad people and we should go away. 5 So we would ask the Court to, again, deny this 6 motion without prejudice, let the matter play out before the 7 District Court in Ohio. If, in fact, JPMorgan is correct, 8 then it'll be over pretty soon. If they still believe 9 they're entitled to any sorts of recompense for their 10 troubles, I'm sure the District Court out there can deal 11 with it; if not, they are free to come back here and seek 12 whatever redress might be available from you. 13 THE COURT: Okay. 14 MR. McLAUGHLIN: Thank you, Your Honor. Is there 15 any questions? 16 THE COURT: No, thank you. 17 MR. McLAUGHLIN: Your Honor, do you wish to hear 18 from Mr. Tighe? 19 THE COURT: I will. 20 MR. TIGHE: Good morning, Your Honor. Thank you. 21 I will be brief. I'd like to address a couple of issues, 22 three to be specific. In regards to the purchase and 23 assumption agreement, the primary cause of action and the 24 primary basis for my claim in Ohio is the purchase and Page assumption agreement, which indisputably occurred the day

23 Case MFW Doc 162 Filed 06/03/16 Page 23 of 42 Page 23 1 before the bankruptcy petition was filed. 2 The purchase and assumption agreement is relevant, 3 not because I say it is. It's relevant because they say it 4 is. In fact, just last year, they went in front of Judge 5 Block in the Anchor Savings litigation and cited two, not 6 just the PAA, Your Honor, but the litigation tracking 7 warrants themselves, as a basis for increasing the award in 8 the Anchor Savings litigation by $200 million. They cited 9 to the litigation tracking warrants, which Your Honor had 10 previously determined were equity. 11 And, by the way, as an aside, Your Honor, Mr. 12 McLaughlin is correct. I don't need to challenge Your 13 Honor's finding as to the nature of the litigation tracking 14 warrants in order to recover in my claim in Ohio, and we 15 state the reason for that. But I just want to re-emphasize 16 this point, that we're not asking to re-litigate or 17 challenge any of your findings or rulings. 18 The import of what JPMorgan said is this: Despite 19 Your Honor calling them equities, JPMorgan went before Judge 20 Block and said they're not equities, they're value to be 21 assessed in the Anchor Savings litigation. How do we get a 22 tax gross up from a $323 million verdict to a $513 million 23 verdict? We look at the litigation tracking warrants, what 24 they were selling for on the day of the purchase and 25 assumption agreement.

24 Case MFW Doc 162 Filed 06/03/16 Page 24 of 42 1 The other aspect of that is that there could be an 2 argument -- WMI made it as the Debtor. There's a potential 3 argument that Your Honor's January 3, 2012 Order discussing 4 the nature of these warrants was, if not mooted, then 5 subsumed by Your Honor's granting of the global settlement 6 agreement. Again, my case in Ohio is based upon the 7 interpretation, in some parts, of the global settlement 8 agreement. But Your Honor, I also have claims for 9 conversion. I have claims for breach of fiduciary duty. I 10 have a number of tort claims that could not have been 11 brought before you in the prior litigation and that can only 12 be brought before a non-debtor, JPMorgan. 13 If I could briefly address a couple of actually, I'll just take one because they've been heavily 15 briefed. I wrote this down because I wanted to make sure I 16 got it right. I think there's great importance to what 17 JPMorgan told the Federal Circuit Court of Appeals. 18 JPMorgan told the Federal Circuit Court of Appeals in 19 response to a direct question, Are you, JPMorgan, ever going 20 to jump up and say that the rights of litigation tracking 21 warrant holders have been extinguished, that they can't come 22 forward and try to seek recovery. And here's what JPMorgan 23 said. Page THE COURT: Well, no, the question was whether 25 they were going to be extinguished as a result of the Anchor

25 Case MFW Doc 162 Filed 06/03/16 Page 25 of 42 1 litigation and any ruling by the Court in that litigation. 2 Will you say they're precluded if we make a ruling here, and 3 they said, no, they won't be bound that. They can bring an 4 action if they think they have an action. 5 MR. TIGHE: Which is what they're attempting to do 6 in Ohio, Your Honor. 7 THE COURT: But they're arguing not the Federal 8 Circuit decision or the Court of Claims decision precludes 9 it; they're saying my Order precludes it. 10 MR. TIGHE: Okay. I did not read that to be as 11 limiting, but that's not my call. That's Your Honor's, so I 12 won't take issue with that. 13 I would finally just note that your conclusion 14 that the settlement of the litigation tracking warrant 15 litigation did not preclude, or did not affect any rights of 16 litigation tracking warrant holders against JPMorgan just in 17 time -- to bring that back Your Honor -- that statement by 18 you was one month after you had already issued your opinion 19 that warrants were equity and that you should go look at 20 WMI. I would suggest that the reference to the fact that no 21 claims were being THE COURT: Say that again? Page MR. TIGHE: Okay. On January 3rd of 2012, you 24 made the ruling that the litigation tracking warrants were 25 equities. As a brief aside, I don't need to challenge that

26 Case MFW Doc 162 Filed 06/03/16 Page 26 of 42 Page 26 1 to recovery in Ohio as an aside. 2 THE COURT: Okay. 3 MR. TIGHE: Then later, Your Honor, when you were 4 approving the settlement about, I think, three and a half 5 weeks/four weeks later, you were approving -- you had a 6 hearing to approve the settlement of litigation tracking 7 warrant class action. And there was a question raised as to 8 what effect does this have on JPMorgan. Your Honor said at 9 that time that the settlement of the litigation further does 10 not affect any rights the litigation tracking warrant 11 holders may have against JPMorgan Chase. 12 To be fair, you said then next that the issue of 13 releasing JPMorgan is raised by the plan and the rights and 14 the duties under the plan. I would simply suggest that if 15 you look at the rights and duties under the plan -- and I 16 defer to Mr. McLaughlin on this because those are issues of 17 interpretation of bankruptcy law, and I will outline my 18 headlights very fast if I keep going down that road. I 19 would suggest at a minimum, that that was part of the basis, 20 part of the analysis that we went through, and we went 21 through a long one to determine whether or not we believed 22 we could go to Columbus and file this suit. 23 I would suggest, Your Honor, that my clients 24 relied upon -- reasonably relied upon those statements and 25 that, more importantly, there are claims in Ohio that can

27 Case MFW Doc 162 Filed 06/03/16 Page 27 of 42 1 only be litigated in Ohio and were not released by this 2 Court. I join my co-counsel in asking for what I think is 3 reasonable relief. I am more than ready to stand before and 4 take whatever slings and arrows they're throwing in 5 Columbus. We feel that these claims have merits. We just 6 don't feel that this is the Court to resolve the merits of 7 those claims. Thank you, Judge. 8 THE COURT: Thank you. 9 MR. GLUECKSTEIN: Your Honor, may I briefly 10 respond to a few points? 11 THE COURT: Yeah. 12 MR. GLUECKSTEIN: And I'll be brief. For the 13 record, Brian Glueckstein, Sullivan & Cromwell. Your Honor, 14 this idea that we're going to go back to Ohio and we're 15 going to file a motion to dismiss. 16 There are 11 causes of action purportedly set out 17 in this Complaint. If you go through each of them, and even 18 the ones that are purportedly tort actions, tortious 19 interference essentially with the warrant agreement, breach 20 of fiduciary duty for not paying them the 85 percent of the 21 warrants, all of these claims arise from the gating issue as 22 to who has the obligations to the litigation tracking 23 warrant holders. Page And in order to answer that question, we have to 25 go back in time to what happened before this Court. So when

28 Case MFW Doc 162 Filed 06/03/16 Page 28 of 42 1 counsel suggests that they don't need to attack Your Honor's 2 rulings in order to obtain relief in Ohio, that is simply 3 false. The only way to prevail on any cause of action that 4 is set forth in that Complaint is to have another Court 5 determine that they didn't have equity in WMI, but had an 6 interest in the Anchor litigation itself and, therefore, 7 have some cause of action against JPMorgan for no providing 8 a portion of that 85 percent to the tracking warrant 9 holders. So the idea that this is existing in some parallel 10 universe is simply false. 11 We also heard the suggestion, Your Honor, that we 12 should go back to Ohio and file a motion to dismiss because 13 that Court is capable of interpreting Your Honor's Order. 14 That is true. Your Honor is also capable of interpreting 15 Your Honor's Order. As we cite case law in our papers, it 16 is clear that in this circuit that the Court who issues the 17 Order is oftentimes best situated to interpret its Order. 18 What we have here is a complex series of events that led up 19 to the Confirmation Order that was issued in 2012, multiple 20 confirmation trials with proof of the global settlement, the 21 adversary proceeding on the litigation tracking warrants 22 that was happening in parallel. It is this Court as 23 intimately aware of all the facts and circumstances that led 24 to the issuance of the global settlement agreement, the Page negotiation and the terms of the global settlement itself,

29 Case MFW Doc 162 Filed 06/03/16 Page 29 of 42 Page 29 1 and issue of the Confirmation Order. 2 So we submit, Your Honor, that even if we could go 3 to Ohio, it is this Court that is best situated to answer 4 the threshold question of whether or not this entire 5 endeavor is barred by the plain terms of Paragraph 16 of the 6 Confirmation Order and Section 2.13(b) of the global 7 settlement agreement. 8 The question was raised by counsel suggesting that 9 this is procedurally complicated. We submit that it is not. 10 There is an Order. Your Honor issued the Order. We believe 11 any causes of action related to rights arising as litigation 12 tracking warrant holders, whether they be under the warrant 13 agreement itself or ancillary tort claims related to failure 14 to perform under that agreement, are all barred by the terms 15 of the Confirmation Order. 16 We would suggest, Your Honor, that certainly while 17 procedurally, this Court could receive an adversary 18 proceeding from Plaintiffs here, that, again, misses the 19 point. The threshold gating issue is can there be a 20 litigation at all. And we submit, Your Honor, that Your 21 Honor's Order clearly protect JPMorgan from exactly the type 22 of endeavor that we are now facing four years after these 23 Orders became final. 24 These were issues that were, as much as any other 25 issue before Your Honor in connection with the confirmation

30 Case MFW Doc 162 Filed 06/03/16 Page 30 of 42 Page 30 1 and approval of the global settlement agreement, the 2 litigation tracking warrants is one of the front and center 3 issues. They were represented on a class basis before this 4 Court by able counsel, they were days and days of hearings 5 before Your Honor, and these issues have been decided. 6 So we would submit, Your Honor, that the outcome 7 here should not be to have to educate the judge in Ohio on 8 this story and start over. Your Honor issued the 9 Confirmation Order. This Complaint in every way, on the 10 four corners of the Complaint, violates that Order, and we 11 would ask that Your Honor grant the motion and award 12 JPMorgan costs. Thank you. 13 THE COURT: Response? 14 MR. McLAUGHLIN: Just very briefly, Your Honor. 15 Again, I guess this brings us back to the basic 16 jurisdictional issue that we talked about earlier and brief. 17 As counsel points out, the four years post-confirmation. 18 JPMorgan query whether or not JPMorgan has a right to bring 19 this motion. They were not the Debtor; they didn't pay the 20 $1900 bucks, or whatever it is, to file the Chapter petition. 22 Are they really entitled to seek the protection of 23 this Court? They say they don't think there should be a 24 litigation. Well, Your Honor, there is a litigation. 25 There's a case pending before a District Court Judge in

31 Case MFW Doc 162 Filed 06/03/16 Page 31 of 42 1 Ohio, so it's there. The question is how to best resolve 2 that. If this Court, again, finds that we violated the 3 automatic stay, that still doesn't -- and I'm sorry. 4 THE COURT: Well, they're saying you violated by 5 Court Order by bringing that action. 6 MR. McLAUGHLIN: Right, right. But that still 7 doesn't get rid of the action. The action's still there. 8 And that's what we're suggesting, is that even if they're 9 right, judicial economy suggests that it's better to let 10 that judge deal with it. Again, nobody's challenging your 11 findings. But this is -- we kind of get to the point where 12 do you even have jurisdiction over those issues. 13 As I indicated earlier, there are 11 causes of 14 action, okay, each of which has pled for a U.S. District 15 Judge in a verified Complaint. So if they believe that they 16 are barred by the provisions of the bankruptcy case -- I 17 know in State Court pleading, District Court bankruptcy is 18 an affirmative defense that must be pled, so let's parallel 19 that. They should plead that to the Court in Ohio. Say, 20 Your Honor, as to Counts 1 through 11, all of them are 21 eviscerated by the fact that the Bankruptcy Court in 22 Delaware ordered the transfer of these assets so it's free 23 and clear of liens and encumbrances, including all tort Page claims, all assumptive claims, whatever kind of claims they 25 are. That judge can rule upon that and that disposes of

32 Case MFW Doc 162 Filed 06/03/16 Page 32 of 42 Page 32 1 that cause of action. 2 If you hold us in contempt today, then that cause 3 of action is still pending out there in Ohio. So the 4 question becomes, what do we do. Can we bring the cause of 5 action back here and argue that the Court doesn't have 6 jurisdiction? It's just cleaner and neater to deal with it 7 out there. They have their protections. Whatever you ruled 8 four years ago, you ruled. But it's -- 9 THE COURT: Wait a minute. If I find you are in 10 contempt of court or in violation of the Confirmation Order 11 by bringing the causes of action in the Ohio Complaint MR. McLAUGHLIN: Yes, Your Honor. 13 THE COURT: -- I think that would be applicable 14 whether it was filed there or filed here. It would a ruling 15 that by doing that, you're in violation. And you can purge 16 yourself of contempt or suffer the consequences. 17 MR. McLAUGHLIN: Yes. And my question then is, 18 okay, how do we purge our contempt? 19 THE COURT: Dismiss it. 20 MR. McLAUGHLIN: Dismiss it. 21 THE COURT: With prejudice. 22 MR. McLAUGHLIN: But how about if there are 23 different causes of action that are not covered by the 24 protections of 363(f)? For instance, counsel has indicated 25 that at least one of the tort causes of actions is based

33 Case MFW Doc 162 Filed 06/03/16 Page 33 of 42 1 upon the purchase and assignment agreement that was entered 2 into before the bankruptcy case. 3 THE COURT: I was trying to find that. 4 MR. McLAUGHLIN: There are factors -- 5 THE COURT: Which cause of action is that? 6 MR. McLAUGHLIN: It is number, I believe it's 7 number 2, Your Honor. Hang on. It's number 1, Paragraph It cites Paragraph 54 of the purchase and assignment 9 agreement. 10 THE COURT: But isn't that inconsistent with my 11 ruling that WMI had an interest in the Anchor litigation, 12 and WMI, therefore, sold it free and clear to JPMorgan? 13 MR. McLAUGHLIN: Your Honor, it could be. Again, 14 I'm not -- the point is, that particular issue is not before 15 the Court. Each one has to be parsed. And the way this 16 matter has been presented to you this morning is not a 17 blanket prohibition against filing a Complaint, as opposed 18 to an analysis of each and every one of the causes of 19 actions, some of which may survive your scrutiny or any 20 judge's scrutiny of what is the effect of Section 363 in the 21 Confirmation Order on these claims. 22 All's we're asking is that we have an opportunity 23 to vet each and every one of the claims. If, in fact, 24 JPMorgan is correct and they're all meritless, then the Page Court will dismiss them all and, again, we'll be before it

34 Case MFW Doc 162 Filed 06/03/16 Page 34 of 42 1 or you with a checkbook, I guess. But, again, at this point 2 in time, this is a two-party litigation, non-debtor third- 3 party litigation where the only dispositive interest the 4 Bankruptcy Court has is what is the meaning of the Orders. 5 We're not challenging, they are what they are, and we 6 believe it's appropriate for the trial court to determine 7 what the application of those Orders and findings are, and 8 your opinions, to the facts as they've been pled. If 9 they've been improperly pled, then we lose and that's the 10 end of it. 11 But for JPMorgan to be able to avail itself of a 12 blanket prohibit, essentially an injunction, we think is 13 inappropriate and overly broad application of the Bankruptcy 14 Court's authority. So we would ask you to, even if you have 15 jurisdiction, we'd ask you to abstain and let the matter 16 play out in Ohio. If, in fact, they're right, it'll be 17 disposed of quickly and then we'll have closure; otherwise, 18 there's still going to be the suit in Ohio. Whatever else 19 would flow from that suit back here, I don't know. 20 THE COURT: As I say, if you're found to be in 21 contempt for pursuing a claim, it doesn't matter where you 22 bring it. 23 MR. McLAUGHLIN: I understand. I understand, Your 24 Honor. 25 THE COURT: All right. Anything more? Page 34

35 Case MFW Doc 162 Filed 06/03/16 Page 35 of 42 1 MR. GLUECKSTEIN: Your Honor, I don't want to go 2 around and around here. But if I could just respond to two 3 points as the movant here. Just specifically on this 4 purchase and assumption agreement point Your Honor just 5 touched on, I'd like to just address that briefly. 6 THE COURT: Okay. 7 MR. GLUECKSTEIN: Your Honor is aware that we 8 asserted in this Court, as we've maintained throughout, that 9 JPMorgan believed that the Anchor litigation, along with all 10 of the assets, the billions upon billions of dollars of 11 assets that were litigated and then settled through the 12 global settlement in this Court, were conveyed to JPMorgan 13 Chase through the purchase and assumption agreement 14 transaction with the FDIC. But WMI came into this Court and 15 contested ownership to the Anchor litigation, amongst 16 various other assets. That contentious litigation is what 17 led to the global settlement. 18 And Your Honor specifically made the finding that 19 you just alluded to a moment ago, that you found that there 20 was a dispute -- a bona fide dispute -- between whether WMB 21 or WMI had the ownership interest in the Anchor litigation 22 and that permitted WMI to convey that asset through the 23 global settlement, specifically pursuant to 363(f)(4). So 24 we don't believe there's any inconsistency in the positions 25 there. Page 35

36 Case MFW Doc 162 Filed 06/03/16 Page 36 of 42 1 Your Honor, on this question about tort claims. I 2 just want to come back to this because we're hearing, again, 3 that we should go to Ohio and we should decide whether each 4 of these tort claims is somehow independently viable. They 5 are not. There is nothing about 363 that limits or excludes 6 tort claims. To the extent any of these tort claims would 7 be viable, they all arise out of the rights they had 8 pursuant to the LTW warrant agreement. 9 And to the extent that the argument, as I think I 10 might be hearing be suggested indirectly, is that this isn't 11 only about the warrant agreement, but somehow about the 12 global settlement and the conduct of JPMorgan Chase. Those 13 issues should have been raised first in connection with 14 approval of the global settlement agreement. And, in fact, 15 certain litigation tracking warrant holders stood here in 16 this Court and made those arguments, that we shouldn't be 17 able to acquire the asset free and clear of the obligations 18 to litigation tracking warrant holders. 19 The time is not now, years later, to assert that 20 somehow JPMorgan, in entering into the global settlement 21 with WMI on the terms that are set forth in the agreement 22 approved by this Court, are somehow improper or give rise to 23 tort claims. As a gating issue, there is no litigation 24 claim to deal with in Ohio. Page And on the process point, Your Honor, Your Honor

37 Case MFW Doc 162 Filed 06/03/16 Page 37 of 42 1 is exactly right. If Your Honor agrees with us and this 2 entire line of causes of action is barred by the 3 Confirmation Order, Your Honor can enforce that Order. You 4 have clear jurisdiction to do that. And then the Plaintiffs 5 have a choice: They can either go to Ohio and dismiss that 6 action with prejudice, or force us to appear there and be in 7 contempt of Your Honor's ruling that you had issued in 8 connection with this motion. We believe it's procedurally 9 straight. 10 Thank you, Your Honor. 11 THE COURT: Well, let me make my ruling. I do 12 find that I have jurisdiction. A Court always has 13 jurisdiction to determine the effect of its own Orders. And 14 I agree with JPMorgan that the focus is not on whether I 15 have jurisdiction over the specific claims of the litigation 16 tracking warrant holders against JPMorgan. 17 The issue before me is whether the claims brought 18 by the LTW holders violates my confirmation or other Orders 19 that I have made, and I find that it does. I have reviewed 20 each of the counts of that Complaint. All of the claims 21 asserted are premised on the warrant agreement and on the 22 argument that the warrant agreement gave the LTW holders an 23 interest in the Anchor litigation itself. Page I've already determined that that is not correct; 25 that under the warrant agreement, they only got an equity

38 Case MFW Doc 162 Filed 06/03/16 Page 38 of 42 1 interest; and as a result of that finding, they have been 2 treated in the plan as such. Their argument that their 3 claims follow the Anchor litigation, I think has no merit 4 and has already been decided by me. 5 Further, I find that Paragraph 16 of the 6 Confirmation Order does provide that JPMorgan purchase the 7 Anchor litigation from the Debtor, WMI, free and clear of 8 all liens, encumbrances, and interests, and they include any 9 interest the LTW noteholders could assert in that Anchor 10 litigation. The scope of Section 363(f) is broad, and it 11 does permit the sale of property over which there is a 12 dispute. 13 In this case, WMI asserted that it owned the 14 Anchor litigation, not the bank, and that it had not been 15 sold to JPMorgan by the FDIC. That litigation -- that issue 16 was settled by the global settlement agreement, whereby all 17 parties agreed that the Anchor litigation would be sold to 18 JPMorgan free and clear of all claims. And JPMorgan 19 provided consideration for that, and the litigation tracking 20 warrant noteholders were provided treatment under the plan 21 as a result of the global settlement agreement. 22 For them to now argue that they have a direct 23 interest in the Anchor litigation is contrary to my rulings, 24 both on the effect that the LTW warrant agreement and on the 25 Confirmation Order itself. Page 38

39 Case MFW Doc 162 Filed 06/03/16 Page 39 of 42 1 And, again, I have looked at each of these counts 2 in the Complaint. They are all based, whether they're in 3 tort or based on contract, they are all based on rights 4 asserted as a result of the warrant agreement. And the 5 rights asserted in the Ohio Complaint are contrary to my 6 ruling as to the effect of the rights granted by the warrant 7 agreement. 8 Tortious interference with contract; again, that's 9 based on the warrant agreement. Promissory estoppel, based 10 on alleged rates they got under the warrant agreement. 11 Conversion, same thing. And if that is not directly 12 contrary to the Order transferring the Anchor litigation 13 free and clear of all claims and interest, nothing else 14 could be. Same with the fraudulent transfer. The global 15 settlement agreement reported to convey any and all interest 16 WMI had? I determined that, I approved the global 17 settlement agreement. The time to challenge that was in 18 objecting or -- excuse me -- appealing the Confirmation 19 Order. Civil conspiracy, conspiring with the Debtor to 20 obtain a settlement and a conveyance in a Bankruptcy Court? 21 I think that is barred by the final Confirmation Order that 22 was entered in this case that found the global settlement 23 agreement approval that authorized the sale of the Anchor 24 litigation. 25 I think it's just bringing these actions is a Page 39