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WaMu Bankruptcy Examiner Wins More Time to Probe Biggest U.S. Bank Failure
Washington Mutual Inc.’s bankruptcy examiner won a judge’s approval to take more time to investigate the biggest U.S. bank failure after saying he needs to interview witnesses and collect documents from regulators.
Joshua R. Hochberg, the examiner, also asked to keep parts of the report confidential when it is filed Nov. 1. U.S. Bankruptcy Judge Mary F. Walrath approved the extension today during a hearing in Wilmington, Delaware. The previous deadline was Oct. 8.
Walrath appointed Hochberg in July to investigate WaMu’s plan to settle lawsuits against JPMorgan Chase & Co. and federal banking regulators. WaMu’s bank was seized by regulators and sold to JPMorgan in 2008 for $1.9 billion.
“We believe we’re making good progress,” Henry Sewell, a lawyer representing Hochberg, said in court today.
WaMu shareholders oppose the settlement, saying lawsuits related to the bank’s failure may bring in $30 billion, enough to pay all of the Seattle-based company’s debts in full, leaving something for them. That figure is disputed by WaMu, JPMorgan and Federal Deposit Insurance Corp., who say there will be nothing left for shareholders when the company finishes liquidating.
Hochberg is investigating claims that JPMorgan and the FDIC colluded to guarantee that JPMorgan could buy WaMu’s bank at a discount. JPMorgan is accused of using confidential information to drive down WaMu’s stock price before the holding company collapsed and the FDIC is accused of prematurely telling New York-based JPMorgan that regulators would seize WaMu’s bank.
WaMu agreed to drop any legal claims against JPMorgan and the FDIC over the bank seizure as part of a settlement that splits almost $10 billion in cash and tax refunds.
A court hearing on WaMu’s proposal to distribute $7 billion to creditors has been pushed back to Dec. 1, Brian Rosen, an attorney for the company, said in court today.
The case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch@bloomberg.net.
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