Mr Cooper Group Inc (COOP)

[tra-der]

news:

http://www.americanconsumernews.com/2010/03/second-chance-for-washington-mutual-nyse-wm.html


Google Buzz
0diggsdigg

Sometimes a company can come back from the brink of disaster, in this case the financial disaster that is bankruptcy. It appears Washington Mutual is poised on the brink of a second chance that might allow the company to emerge from bankruptcy as a stand alone company. Last week, Washington Mutual, the biggest bank in United States history to fail, filed for a reorganization plan with the support of creditors and JP Morgan Chase & Co.

Washington Mutual, otherwise recognized as WaMu, was seized by the United States Office of Thrift Supervision on September 25, 2008. Placed in the hands of the Federal Deposit Insurance Corporation (FDIC) who in turn sold banking subsidiaries to JP Morgan Chase for just under 2 billion dollars, Washington Mutual banks were reopened as JP Morgan branches. On September 26, 2008 Washington Mutual, Inc. filed for Chapter 11 bankruptcy.

Chapter 11 bankruptcy is the most common choice for large businesses who are attempting to restructure their debt. In most cases the corporation filing for Chapter 11 remains in possession of the assets and can continue to operate with court supervision.

A year and a half later, the company is now ready to move forward, in part due to the $5.6 billion to be received through tax refunds. This money will be shared between the FDIC, JP Morgan and Washington Mutual based on an agreement at the beginning of March. The FDIC has not yet signed off on the reorganization plan however some investors are betting on the fact that Washington Mutual will come out of this ordeal as a stand alone company.

Washington Mutual is not out of the woods as of yet, as experts predict shareholders will object to this reorganization plan. Shareholders estimate the company may have up to 20 billion dollars in assets to be distributed to creditors, however the company is planning on distributing roughly 7 billion dollars. JP Morgan on the other hand appears to come out of the ordeal a winner, having bought the seized operations at a low cost and now receiving money back from the tax returns.

While the future of Washington Mutual is uncertain, consumers are reminded that bankruptcy is a last resort when dealing with unmanageable debt. In some cases where bankruptcy truly is the only option, an individual can improve their finances over time, however in many cases their financial burdens continue for many years in the future.