Tags: US | Washington | Mutual | Bankruptcy

Wamu Files Amended Chapter 11 Plan

Tuesday, 18 May 2010 10:49 AM

Washington Mutual Inc. has filed an amended reorganization plan after negotiations with the FDIC, putting the bank holding company closer to exiting Chapter 11 bankruptcy.

The plan filed Sunday in Delaware bankruptcy court is a revised version of an earlier plan that is based on a proposed global settlement involving WaMu, the Federal Deposit Insurance Corp., and JPMorgan Chase & Co.

The parties filed lawsuits against one another over roughly $4 billion in disputed deposit accounts after the FDIC seized WaMu's flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion.

The FDIC objected to the initial settlement plan, resulting in negotiations that led to the amended plan, but a WaMu spokesman said Monday that discussions with the FDIC are continuing. He did not provide details.

The original settlement called for JPMorgan to turn over the disputed deposits to Washington Mutual after deducting $172 million as its share of tax refunds received.

In return, JPMorgan was to 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. The new plan revises that split to 80-20.

WaMu also was to 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. The new plan calls for WaMu to get 68.5 percent and the FDIC to get 31.5 percent of those refunds, in return for new indemnity concessions from JPMorgan.

Under the new plan, bank bondholders also would be eligible to receive up 5.5 percent of WMI's share of the second round of tax refunds, with a cap of $150 million, but shareholders would still receive no recovery.

A hearing in the case is scheduled for Wednesday.

(This version CORRECTS day of hearing to Wednesday, sted Tuesday in last graf. ADDs detail.)

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