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Case 08-12229-MFW
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
---------------------------------------------------------------x
:
In re
:
:
WASHINGTON MUTUAL, INC., et al.,1
:
:
Debtors.
:
:
:
---------------------------------------------------------------x
Chapter 11
Case No. 08-12229 (MFW)
(Jointly Administered)
Re: Docket No. 11546
CERTIFICATION OF COUNSEL REGARDING ORDER APPROVING
STIPULATION AND AGREEMENT EXTENDING THE PERIOD
IN WHICH CALIFORNIA FRANCHISE TAX BOARD MUST
RESPOND TO WMI LIQUIDATING TRUST’S (A) OBJECTION
TO PROOF OF CLAIM FILED BY CALIFORNIA FRANCHISE TAX
BOARD (CLAIM NO. 3908) AND (B) MOTION FOR DETERMINATION
OF TAX LIABILITY UNDER SECTION 505 OF THE BANKRUPTCY CODE
The undersigned hereby certifies as follows:
1.
On December 31, 2013, WMI Liquidating Trust (“WMILT”), as successor in
interest to Washington Mutual, Inc. (“WMI”) and WMI Investment Corp., formerly debtors and
debtors in possession filed WMI Liquidating Trust’s (A) Objection to Proof of Claim Filed by
California Franchise Tax Board (Claim No. 3908) and (B) Motion for Determination of Tax
Liability Under Section 505 of the Bankruptcy Code [D.I. 11546] (the “California Objection”),
seeking (a) to reduce and allow proof of claim number 3908 (the “California Claim”) filed by the
California Franchise Tax Board (“FTB,” and together with WMILT, the “Parties”) in the
approximate amount of $24 million, excluding interest, and (b) a determination that WMI and
certain of its affiliates overpaid their California income tax liability by approximately
$441 million, excluding interest, with a response deadline of February 3, 2014 at 4:00 p.m.
1
The Debtors in these chapter 11 cases along with the last four digits of each Debtor’s federal tax
identification number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395). The
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The Parties continue to engage in good-faith arms’ length negotiations with
respect to the California Objection and the validity and amount of the California Claim and, in
order to allow such negotiations to proceed, have determined to extend the response deadline
with respect to the California Objection to March 5, 2014 at 4:00 p.m. (ET) in accordance with
the terms contained in the Stipulation and Agreement Extending the Period in Which California
Franchise Tax Board Must Respond to WMI Liquidating Trust’s (A) Objection to Proof of Claim
Filed by California Franchise Tax Board (Claim No. 3908) and (B) Motion for Determination of
Tax Liability Under Section 505 of the Bankruptcy Code, copy of which is attached as Exhibit 1
to the proposed form of order (the “Proposed Order”) attached hereto as Exhibit A.
WHEREFORE WMILT respectfully requests that the Court enter the Proposed Order at
its earliest convenience.
principal offices of WMILT, as defined herein, are located at 1201 Third Avenue, Suite 3000, Seattle, Washington
98101.
2
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Dated: February 3, 2014
Wilmington, Delaware
/s/ Amanda R. Steele
Mark D. Collins (No. 2981)
Paul N. Heath (No. 3704)
Amanda R. Steele (No. 5530)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
– and –
Brian S. Rosen, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attorneys to the WMI Liquidating Trust
3
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Exhibit A
(Proposed Order)
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
---------------------------------------------------------------x
:
In re
:
:
WASHINGTON MUTUAL, INC., et al.,1
:
:
Debtors.
:
:
---------------------------------------------------------------x
Chapter 11
Case No. 08-12229 (MFW)
(Jointly Administered)
Re: Docket Nos. 11546 &______
ORDER APPROVING STIPULATION AND AGREEMENT EXTENDING THE
PERIOD IN WHICH CALIFORNIA FRANCHISE TAX BOARD MUST
RESPOND TO WMI LIQUIDATING TRUST’S (A) OBJECTION
TO PROOF OF CLAIM FILED BY CALIFORNIA FRANCHISE TAX
BOARD (CLAIM NO. 3908) AND (B) MOTION FOR DETERMINATION
OF TAX LIABILITY UNDER SECTION 505 OF THE BANKRUPTCY CODE
WMI Liquidating Trust (“WMILT”), as successor in interest to Washington Mutual, Inc.
and WMI Investment Corp., formerly debtors and debtors in possession, and California
Franchise Tax Board (“FTB,” and together with WMILT, the “Parties”), having entered into that
certain Stipulation and Agreement Extending the Period in Which California Franchise Tax
Board Must Respond to WMI Liquidating Trust’s (A) Objection to Proof of Claim Filed by
California Franchise Tax Board (Claim No. 3908) and (B) Motion for Determination of Tax
Liability Under Section 505 of the Bankruptcy Code (the “Stipulation”); and the Court having
reviewed the Stipulation; and the Court having determined that good cause has been
demonstrated for approving the Stipulation; it is hereby
ORDERED that the Stipulation attached hereto as Exhibit 1 is approved; and it is
further
1
The Debtors in these chapter 11 cases along with the last four digits of each Debtor’s federal tax
identification number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395). The
principal offices of WMILT, as defined herein, are located at 1201 Third Avenue, Suite 3000, Seattle, Washington
98101.
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ORDERED that the Parties are hereby authorized to take any and all actions
reasonably necessary to effectuate the terms of the Stipulation; and it is further
ORDERED that this Court shall retain jurisdiction to hear and determine all
matters arising from or related to the implementation, interpretation, or enforcement of this
Order.
Dated: February
, 2014
Wilmington, Delaware
THE HONORABLE MARY F. WALRATH
UNITED STATES BANKRUPTCY JUDGE
2
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EXHIBIT 1
(Stipulation)
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
---------------------------------------------------------------x
:
In re
:
:
WASHINGTON MUTUAL, INC., et al.,1
:
:
Debtors.
:
:
---------------------------------------------------------------x
Chapter 11
Case No. 08-12229 (MFW)
(Jointly Administered)
STIPULATION AND AGREEMENT EXTENDING THE PERIOD
IN WHICH CALIFORNIA FRANCHISE TAX BOARD MUST
RESPOND TO WMI LIQUIDATING TRUST’S (A) OBJECTION
TO PROOF OF CLAIM FILED BY CALIFORNIA FRANCHISE TAX
BOARD (CLAIM NO. 3908) AND (B) MOTION FOR DETERMINATION
OF TAX LIABILITY UNDER SECTION 505 OF THE BANKRUPTCY CODE
WMI Liquidating Trust (“WMILT”), as successor in interest to Washington
Mutual, Inc. (“WMI”) and WMI Investment Corp., formerly debtors and debtors in possession
(collectively, the “Debtors”), and California Franchise Tax Board (“FTB,” and together with
WMILT, the “Parties”), by and through their respective counsel, hereby enter into this stipulation
and agreement (the “Stipulation”), and stipulate as follows:
RECITALS
A.
On September 26, 2008, each of the Debtors filed a voluntary petition for
relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the
United States Bankruptcy Court for the District of Delaware (the “Court”).
B.
On December 12, 2011, the Debtors filed their Seventh Amended Joint
Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code
1
The Debtors in these chapter 11 cases along with the last four digits of each Debtor’s federal tax identification
number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395). The principal offices of
WMILT, as defined herein, are located at 1201 Third Avenue, Suite 3000, Seattle, Washington 98101.
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[D.I. 9178] (as modified, the “Plan”). By order, dated February 23, 2012 [D.I. 9759] (the
“Confirmation Order”), the Court confirmed the Plan and, upon satisfaction or waiver of the
conditions described in the Plan, the transactions contemplated by the Plan were substantially
consummated on March 19, 2012 [D.I. 9933].
C.
On March 26, 2009, FTB filed a proof of claim, Claim No. 2093, against
WMI in the amount of $2,479,959,945.00, asserting amounts for taxes, penalties, and interest
owed for the taxable years from 1994 through 2008.2
D.
On May 26, 2010, FTB filed a proof of claim, Claim No. 3845, which
amended and superseded Claim No. 2093, in the amount of $267,378,281.00, asserting amounts
for taxes, penalties, and interest owed for the taxable years from 1997 through 2008. By order,
dated August 9, 2010 [D.I. 5245], the Court granted the Debtors’ Forty-Fifth Omnibus (NonSubstantive) Objection to Claims and disallowed Claim No. 2093, on the basis that it had been
amended and superseded by Claim No. 3845.
E.
On September 2, 2010, FTB filed a proof of claim, which claim was
assigned claim number 3908 (the “California Claim”), amending and superseding Claim
No. 3845, in the amount of $280,519,148.00, again asserting amounts for taxes, penalties, and
interest owed for the taxable years from 1997 through 2008. By order, dated October 21, 2010
[D.I. 5656], the Bankruptcy Court granted the Debtors’ Forty- Ninth Omnibus (Non-Substantive)
Objection to Claims and disallowed Claim No. 3845, on the basis that it had been amended and
superseded by the California Claim.
2
A duplicate of this claim was filed shortly thereafter, and assigned claim number 3621 for administrative purposes.
By order, dated August 10, 2009 [D.I. 1465], the Court granted the Debtors’ Fourth Omnibus (Non-Substantive)
Objection to Claims and disallowed such claim, on the basis that it was duplicative of Claim No. 2093.
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Pursuant to Section 26.1 of the Plan, WMILT was required to file and
serve all objections to Claims no later than September 17, 2012 (the “Claim Objection
Deadline”), or such later date if approved by the Bankruptcy Court.
G.
On September 14, 2012, and June 7, 2013 (collectively, the “Stipulation
Extensions”), respectively, WMILT and FTB entered into that certain Stipulation Extending
Time to Object to Proof of Claim Filed By California Franchise Tax Board (Claim No. 3908),
and that certain Second Stipulation Extending Time to Object to Proof of Claim Filed By
California Franchise Tax Board (Claim No. 3908), (1) extending the Claim Objection Deadline
until December 31, 2013, while the parties engaged in negotiations in an effort to resolve the
California Claim consensually, and (2) providing that WMILT would submit a notice to FTB
sixty (60) days prior to filing an objection to the California Claim. By orders, dated
September 17, 2012, and June 19, 2013, the Bankruptcy Court approved the Stipulation
Extensions.
H.
By letter, dated October 1, 2013, WMILT informed FTB of its intention to
file an objection to the California Claim.
I.
On December 31, 2013, WMILT filed WMI Liquidating Trust’s
(A) Objection to Proof of Claim Filed by California Franchise Tax Board (Claim No. 3908) and
(B) Motion for Determination of Tax Liability Under Section 505 of the Bankruptcy Code
[D.I. 11546] (the “California Objection”), seeking (a) to reduce and allow the California Claim
in the approximate amount of $24 million, excluding interest, and (b) a determination that WMI
and certain of its affiliates overpaid their California income tax liability by approximately
$441 million, excluding interest, with a response deadline of February 3, 2014 at 4:00 p.m.
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On January 17, 2014, duly authorized representatives of the Parties,
including, without limitation, the Chief Financial Officer of WMILT and FTB’s Assistant Chief
Counsel (Litigation Bureau), held a meeting (the “January 17 Meeting”) for the express purpose
of engaging in substantive discussions regarding a consensual resolution of the California Claim
and the California Objection.
K.
The Parties continue to engage in good-faith arms’ length negotiations
with respect to the California Objection and the validity and amount of the California Claim and,
in order to allow such negotiations to proceed, have determined to extend the response deadline
with respect to the California Objection to the extent and in accordance with the terms contained
herein.
NOW, THEREFORE, IT IS HEREBY AGREED BY AND BETWEEN THE
PARTIES, BY AND THROUGH THEIR RESPECTIVE COUNSEL, AS FOLLOWS:
1.
This Stipulation shall be binding upon the Parties and effective as of the
date of execution.
2.
Without the need for execution of any other agreement, document or
instrument, the period in which FTB must respond to the California Objection is extended until
March 5, 2014 at 4:00 p.m. (ET) (the “Revised Response Deadline”).
3.
Unless otherwise extended, in writing, by both Parties, FTB shall file with
the Bankruptcy Court and serve upon WMILT its response, if any, to the California Objection
and the relief requested therein so as to be received by the Revised Response Deadline.
4.
In consideration for WMILT agreeing to the Revised Response Deadline,
FTB agrees to the following: (a) to seriously consider the substance of the analyses and
valuations presented by WMILT at the January 17 Meeting, (b) FTB shall provide WMILT with
an offer to resolve the dispute in its entirety by no later than January 31, 2014, and (c) in
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connection with the foregoing settlement offer, FTB shall consider the time value of funds as
part of the offer to be submitted to WMILT.
5.
In the event that a consensual settlement is reached with respect to the
California Claim and the California Objection, FTB shall (a) include within that settlement an
allowance to reimburse WMILT for its reasonable costs and expenses incurred in preparing and
filing the California Objection, and (b) utilize its best efforts to perform all obligations to be
performed by FTB so as to consummate that settlement no later than April 30, 2014.
6.
This Stipulation contains the entire agreement between the Parties as to
the subject matter hereof and supersedes all prior agreements and undertakings between the
Parties relating thereto.
7.
Each person who executes this Stipulation represents that he or she is duly
authorized to execute this Stipulation on behalf of the respective Parties hereto for the purpose of
binding such Party to the terms of this Stipulation, and that each such Party has full knowledge
and has consented to this Stipulation.
8.
This Stipulation may not be modified other than by a signed writing
executed by the Parties hereto or by further order of this Court, after notice to each of the Parties
hereto.
9.
The Stipulation may be executed in multiple counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same
instrument, and it shall constitute sufficient proof of the Stipulation to present any copy, copies,
electronic copies, or facsimile signed by the Parties hereto to be charged.
10.
The Stipulation shall be binding upon, and inure to the benefit of, the
successors and assigns of the Parties hereto.
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The Court shall have sole and exclusive jurisdiction to hear disputes
arising out of or related to this Stipulation.
Dated: January 31, 2014
WMI LIQUIDATING TRUST
CALIFORNIA FRANCHISE TAX BOARD
JOZEL BRUNETT, CHIEF COUNSEL
By: /s/ Amanda R. Steele
Mark D. Collins, Esq. (No. 2981)
Paul N. Heath (No. 3704)
Amanda R. Steele (No. 5530)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, DE 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
By: /s/ Willaim C. Hilson, Jr. for
Todd M. Bailey, Esq.
Tax Counsel IV
California Franchise Tax Board
Legal Division – MS A260
PO Box 1720
Rancho Cordova, California 95741-1720
Telephone: (916) 845-6340
Facsimile: (916) 855-5607
Attorney to California FTB
– and –
Brian S. Rosen, Esq.
WEIL, GOTSHAL & MANGES LLP
757 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attorneys to WMILT
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