Washington Mutual, FDIC reach reorganization deal

DOVER, Del. – Bank holding company Washington Mutual Inc. has reached an agreement with the Federal Deposit Insurance Corporation that puts WaMu closer to exiting Chapter 11 bankruptcy.

The revised reorganization plan filed Sunday in Delaware bankruptcy court is based on a settlement involving the bank holding company, the FDIC and JPMorgan Chase Bank, which filed lawsuits against each other after the FDIC seized WaMu’s flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion.

The FDIC objected to the initial settlement plan, resulting in negotiations that led to the amended plan.

In addition to distributing some $7 billion in funds among various parties as part of the settlement, the plan allows certain creditors to buy new shares in the reorganized company. Holders of existing shares would receive nothing.