WILMINGTON, Del. — Washington Mutual Inc. has tentatively resolved disputes with JPMorgan Chase &Co. and the Federal Deposit Insurance Corp. over some $4 billion at issue in the bank holding company’s Chapter 11 bankruptcy, a WaMu attorney said Friday.
The FDIC seized Washington Mutual’s flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion. The sale resulted in the two banking companies and the government agency trading lawsuits over roughly $4 billion in disputed deposit accounts.
WaMu attorney Brian Rosen told U.S. Bankruptcy Judge Mary Walrath on Friday that JPMorgan has agreed to turn over the money to Washington Mutual after deducting $172 million as its share of tax refunds received.
In return, JPMorgan will get 70 percent of expected tax refunds resulting from WaMu’s prior operating losses that are valued at about $3 billion, with Washington Mutual getting 30 percent.
WaMu also will get about 40 percent of a second round of operating-loss tax refunds valued at about $2.6 billion, with roughly 60 percent going to the FDIC.
“WMI is confident that this agreement will provide substantial recoveries for the company’s creditors, and that it is consistent with WMI’s efforts over the last 18 months to maximize the value of its bankruptcy estate,” the company said in a prepared statement. “WMI is also pleased that this agreement vindicates the positions it took in court, as the company believes that its court positions created the pressure necessary to move this agreement forward.”
Shares of WaMu closed down 18 cents, or 47 percent, at 19 cents in over-the-counter trading.
Rosen said documentation of the settlement will be submitted to the court and will be included in a reorganization plan to be filed by March 26, followed by a disclosure statement hearing in early May.
The settlement negated the need for a hearing Friday on WaMu’s request for a judgment that would have forced JPMorgan to surrender the deposits, and on the FDIC’s request that it be allowed to hold the funds pending resolution of related lawsuits.
“I am happy to report that we have a three-way understanding,” Rosen told Walrath, adding that the agreement is subject to approval by the governing boards of the FDIC and the two banking companies.
Rosen said the deal, which could result in the dismissal of three lawsuits pitting WaMu, JPMorgan and the FDIC against one another, also is contingent on the resolution of claims from holders of billions of dollars of bonds issued by Washington Mutual Bank, or WMB. Without the bondholders’ approval, or the disallowance of their claims in their entirety, the settlement could turn to “vapor,” Rosen said outside court.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
