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Failed bank agrees settlement
Source: Agencies |
December 14, 2011, Wednesday
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Print Edition
Print Edition
WASHINGTON Mutual Inc, the biggest bank to fail in US history, said it reached a settlement in a dispute between shareholders and certain creditors that prevented the bank from emerging from Chapter 11 bankruptcy proceedings.
It got a respite late on Monday when it said in a court filing that the shareholders represented by an equity committee would drop legal claims against settlement noteholders.
"The equity committee and its advisors are pleased with the result and look forward to and support the swift confirmation of the plan," said Michael Willingham, chairman of the equity committee appointed in the Chapter 11 proceedings.
Washington Mutual has languished in Chapter 11 bankruptcy since regulators seized its savings and loan in September 2008.
The plan to settle the dispute will allow the bank to distribute US$7 billion to creditors.
Its reorganized assets will consist of its equity interests in WMI Investment Corp and WM Mortgage Reinsurance Co Inc. The reorganized company will be funded by a US$75 million contribution from certain creditors. The reorganized entity will also receive a credit line of US$125 million from the noteholders, according to the court filing.
Washington Mutual said the majority of common equity in the reorganized company will be distributed to the company's current preferred and common equity holders.
In September, Judge Mary Walrath rejected its second attempt to end its bankruptcy as disputes raged between the shareholders and noteholders.
Washington Mutual filed for bankruptcy in September 2008, at the height of the financial crisis, after regulators seized its savings and loan business.
The banking business was sold by the Federal Deposit Insurance Corp to JPMorgan Chase & Co for US$1.88 billion.
Almost immediately after the bankruptcy started, Washington Mutual, the FDIC and JPMorgan began a legal battle to sort out who owned what.
It got a respite late on Monday when it said in a court filing that the shareholders represented by an equity committee would drop legal claims against settlement noteholders.
"The equity committee and its advisors are pleased with the result and look forward to and support the swift confirmation of the plan," said Michael Willingham, chairman of the equity committee appointed in the Chapter 11 proceedings.
Washington Mutual has languished in Chapter 11 bankruptcy since regulators seized its savings and loan in September 2008.
The plan to settle the dispute will allow the bank to distribute US$7 billion to creditors.
Its reorganized assets will consist of its equity interests in WMI Investment Corp and WM Mortgage Reinsurance Co Inc. The reorganized company will be funded by a US$75 million contribution from certain creditors. The reorganized entity will also receive a credit line of US$125 million from the noteholders, according to the court filing.
Washington Mutual said the majority of common equity in the reorganized company will be distributed to the company's current preferred and common equity holders.
In September, Judge Mary Walrath rejected its second attempt to end its bankruptcy as disputes raged between the shareholders and noteholders.
Washington Mutual filed for bankruptcy in September 2008, at the height of the financial crisis, after regulators seized its savings and loan business.
The banking business was sold by the Federal Deposit Insurance Corp to JPMorgan Chase & Co for US$1.88 billion.
Almost immediately after the bankruptcy started, Washington Mutual, the FDIC and JPMorgan began a legal battle to sort out who owned what.
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