Washington Mutual files plan based on FDIC, JPMorgan settlement

By Caroline Salls

Pittsburgh, May 17 - Washington Mutual, Inc. filed an amended plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the District of Delaware that incorporates a global settlement among the company, the Federal Deposit Insurance Corp. and JPMorgan Chase Bank, NA.

As previously reported, under the settlement and amended plan:

• Washington Mutual will establish a liquidating trust to make distributions to creditors;

• The trust will distribute more than $7 billion in funds, including roughly $4 billion of previously disputed funds on deposit with JPMorgan;

• Reorganized Washington Mutual is expected to undertake a rights offering under which some creditors will receive a right to purchase newly issued shares of common stock;

• The reorganized company will retain its equity interests in WMI Investment Corp. and WM Mortgage Reinsurance Corp.;

• JPMorgan will assume liabilities related to benefit plans, including the pension plan sponsored by Washington Mutual;

• Lawsuits involving the settlement parties will be stayed or dismissed. In addition, JPMorgan and the FDIC in its capacity as receiver of Washington Mutual Bank will withdraw claims against Washington Mutual's bankruptcy estate;

• Holders of senior notes claims and senior subordinated notes claims will receive a share of creditor cash and liquidating trust interests.

Holders of senior notes claims and senior subordinated notes claims can elect to receive new common stock in lieu of cash or liquidating interests;

• Holders of general unsecured claims will receive a share of creditor cash and liquidating trust interests. General unsecured creditors who are institutional buyers and have claims in excess of $4 million can elect to receive new common stock in lieu of cash and liquidating trust interests;

• Holders of Piers claims will receive a share of new common stock, creditor cash and liquidating trust interests. These creditors can elect to receive additional cash or stock in lieu of some or all of new common stock, cash or liquidating trust interests; and

• Old preferred and common equity securities will be cancelled. Holders of old preferred equity interests will receive a share of liquidating trust interests if all allowed claims and post-bankruptcy interest claims are paid in full in cash, but holders of old common equity securities will receive no distribution.

A hearing on the amended disclosure statement is scheduled for Wednesday.

Washington Mutual, a Seattle-based savings and loan holding company, filed for Chapter 11 bankruptcy on Sept. 26, 2008. Its Chapter 11 case number is 08-12229.

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