From Dow Jones:
Washington Mutual Delays Chapter 11 Plan Showdown To July 20 WAMUQBY Dow Jones & Company, Inc.
— 12:16 PM ET 07/08/2010
WILMINGTON, Del. (Dow Jones)--Washington Mutual Inc. (WAMUQ) on Thursday postponed until July 20 a scheduled courtroom showdown in favor of continued talks with shareholders and creditors who oppose its Chapter 11 exit plan.
Instead of facing off over demands for a probe of the deal underlying the plan, shareholders and the embattled bank holding company will meet Monday for continued negotiations.
Shareholders will be wiped out under the Chapter 11 plan Washington Mutual (WAMUQ) has proposed, one that is based on a settlement of legal claims arising out of the bank holding company's loss of Washington Mutual Bank, or WaMu.
"Hopefully, these discussions that we're going to be having on Monday will yield an understanding," said Washington Mutual (WAMUQ) attorney Brian Rosen, of Weil Gotshal & Manges.
Thursday's announcement in the U.S. Bankruptcy Court in Wilmington, Del., was the latest in a series of delays amid protests from shareholders and unhappy creditors of Washington Mutual (WAMUQ).
The company wants to hand out more than $7 billion in cash under a Chapter 11 plan built around a settlement with WaMu's new owner, J.P. Morgan Chase & Co. (JPM), and the Federal Deposit Insurance Corp.
The FDIC brokered the $1.9 billion sale of WaMu to J.P. Morgan after regulators seized the thrift in September 2008. The loss of WaMu touched off a wave of legal actions, ranging from accusations of fraud and mismanagement to technical infractions of the deals that allowed the Seattle banking company to raise billions in the public debt markets.
Shareholders say the settlement is a cheap sellout of valid legal claims that are worth enough to cover all the bills and leave them with something. Attorneys for the company say the risk and delay of litigating the WaMu-related claims makes the settlement a good deal.
WaMu's former parent filed for Chapter 11 protection about a day after being stripped of WaMu. The thrift's final affairs, and its $13 billion worth of debts, are being handled in a receivership being overseen by the FDIC.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Peg Brickley, Dow Jones Daily Bankruptcy Review; 302-521-2266; peg.brickley@dowjones.com
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