June 4, 2010 in Business

WaMu lawyers to meet with shareholders group

Randall Chase Associated Press
 

WILMINGTON, Del. – Washington Mutual Inc. has agreed to meet with shareholders seeking information in the company’s Chapter 11 bankruptcy, the largest bank failure in U.S. history.

WaMu attorneys on Thursday said they would meet with parties wanting more information and would withdraw a motion setting deadlines for objecting to the company’s reorganization plan and outlining rules to obtain information about it.

Judge Mary Walrath postponed consideration of the outline of WaMu’s reorganization plan and told attorneys to try to resolve their disputes over information sharing prior to another hearing on June 17.

The FDIC seized Washington Mutual’s flagship bank in 2008 and sold its assets to JPMorgan Chase & Co. for $1.9 billion. The parties subsequently filed lawsuits against one another over roughly $4 billion in disputed deposit accounts.

The shareholders are seeking information underlying the proposed settlement, in which JPMorgan agreed to turn over the disputed deposits to Washington Mutual. In return, JPMorgan would receive 80 percent of expected tax refunds resulting from WaMu’s prior operating losses, which are valued at about $3 billion, with Washington Mutual getting 20 percent.

WaMu also would get 68.5 percent of a second round of operating-loss tax refunds valued at about $2.6 billion, with the rest going to the FDIC. WaMu’s bank bondholders also would be eligible to receive up 5.5 percent of WMI’s share of the second round of tax refunds, with a cap of $150 million, but shareholders would receive nothing.

Last month, Walrath directed Washington Mutual to provide information relevant to the settlement to the shareholders committee, but she denied the committee’s request for an independent examiner who would render an objective opinion on whether the settlement was fair and reasonable.

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