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DJ Hochberg To Lead Probe Of Washington Mutual Bankruptcy Deal
By Peg Brickley
of DOW JONES DAILY BANKRUPTCY REVIEW

Federal bankruptcy watchdogs Monday named Joshua R. Hochberg to investigate a proposed settlement of billions of dollars worth of legal trouble stemming from the September 2008 seizure and sale of Washington Mutual Bank, or WaMu.
Hochberg, an attorney with McKenna Long & Aldridge in Washington, D.C., was the court-appointed examiner in the case of failed commodities broker Refco Inc.
A bankruptcy judge last week authorized the investigation after former WaMu parent Washington Mutual Inc. (WAMUQ) agreed that an outside view of the settlement is in order.
A mortgage-stuffed thrift, WaMu was taken over by regulators when anxieties about the stability of the country's financial system were running high.
Washington Mutual filed for Chapter 11 protection after losing WaMu, and wants to settle its claims against regulators and against J.P. Morgan Chase & Co. (JPM), which bought the thrift for $1.9 billion.
The proposed settlement is the foundation for Washington Mutual's Chapter 11 plan, which gives the former bank holding company some $7 billion to distribute to creditors.
That's not enough to provide a payment to shareholders, who rank at the bottom of the pile of Washington Mutual's debts. They oppose the pact, insisting that the wrongs done to WaMu's parent entitle them to a recovery.
Some $20 billion worth of legal claims have been filed in an assortment of actions, ranging from fights over $4 billion in bank account deposits to quarrels over who was to blame for the loss of WaMu.
Shareholders demanded a probe and Washington Mutual finally agreed, but insisted on a speedy schedule.
Hochberg has been asked to give a preliminary report by Sept. 7.
Washington Mutual wants to start confirmation hearings on its Chapter 11 plan by November.

(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; [e-mail]


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