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WaMu to decide next week if shareholder deal possible
10:40 am ET 06/08/2011- Reuters
* WaMu could move ahead with plan shareholders had opposed

* Timing for exiting bankruptcy pushed back again

By Tom Hals

WILMINGTON, Del., June 8 (Reuters) - Washington Mutual Inc <WAMUQ.PK> will decide by the end of next week if it can finalize an agreement with shareholders to end their opposition to the company's plan to repay creditors, the company's lawyer told a bankruptcy hearing on Wednesday.

If Washington Mutual is not able to put into writing an agreement reached with shareholders last month, it will move ahead with a bankruptcy plan that shareholders had opposed, according to Brian Rosen, of law firm Weil, Gotshal & Manges LLP, which represents Washington Mutual.

Washington Mutual has been in bankruptcy since September 2008, when its savings and loan business was seized by regulators and immediately sold to JPMorgan Chase & Co in the biggest bank failure in U.S. history.

Rosen told the bankruptcy hearing that documenting an agreement with shareholders was complex and taking longer than anticipated. He asked the court to reschedule a hearing related to a new bankruptcy plan to July 5 from its original date on June 29.

The company held hearings in December on a previous bankruptcy plan that was rejected by Judge Mary Walrath.

Rosen said the company would provide notice by June 17 if Washington Mutual would move ahead with its sixth modified bankruptcy plan, which was opposed by shareholders, or draft a seventh plan with shareholder support.

Shareholders were the last large group opposing Washington Mutual's plan to repay its creditors, which includes hedge fund investors as well as suppliers who were owed money when the company went bankrupt.

Shareholders objected to a sixth plan which paid most creditors in full but would likely leave little for them.

In May, Washington Mutual outlined a fresh agreement with shareholders which would end their objections by giving them a stake in a small reinsurance business that would emerge from bankruptcy. The reinsurer's main asset would be tax breaks that could be applied to future earnings. Shareholders had said the business could be worth billions rather than the $160 million estimated by Washington Mutual and creditors. (Editing by Dave Zimmerman)
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