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Washington Mutual Files Amended Plan Of Reorganization With US Bankruptcy Court

Washington Mutual (WMI) has filed with the US Bankruptcy Court for the District of Delaware an amended plan of reorganization and disclosure statement. The plan contemplates the implementation of a global settlement agreement among WMI, the Federal Deposit Insurance Corporation (FDIC) and JPMorgan Chase Bank.

Under the the plan, WMI will establish a liquidating trust to make distributions to creditors on account of their allowed claims. In accordance with the terms of the plan, the trust will distribute funds in excess of approximately $7bn, including approximately $4bn of previously disputed funds on deposit with JPMorgan Chase Bank (JPMC).

It is anticipated that the reorganized WMI will undertake a rights offering pursuant to which certain creditors will receive a right to purchase newly issued shares of reorganized WMI common stock. The reorganized WMI will retain equity interests in WMI Investment and WM Mortgage Reinsurance Company.

JPMC will assume certain liabilities related to benefit plans (including the pension plan sponsored by WMI). The various litigations involving WMI, JPMC and FDIC will be stayed or dismissed. In addition, JPMC and the FDIC (in its capacity as receiver of Washington Mutual Bank and in its corporate capacity) will withdraw claims against WMI’s bankruptcy estate and the parties will exchange mutual releases; and preferred and common equity securities previously issued by WMI will be canceled.