Washington Mutual equity committee renews examiner appointment request

By Caroline Salls

Pittsburgh, June 8 - Washington Mutual, Inc.'s official committee of equity security holders has again asked the U.S. Bankruptcy Court for the District of Delaware to appoint an examiner for the company's Chapter 11 bankruptcy case, according to a Tuesday court filing.

As previously reported, the equity committee asked the court to appoint an examiner on April 26. That motion was denied on May 5.

In the previous motion, the committee said the company identified and asserted a variety of legal claims against JPMorgan Chase and the Federal Deposit Insurance Corp. that, if successful, would add billions of dollars of value to Washington Mutual's estate.

However, the committee said the company proposed a plan of reorganization based on a global settlement, which would release known and unknown claims against JPMorgan, the FDIC and others without further investigation.

According to Tuesday's renewed motion, the denial of the original examiner request was based on the fact that the company and its official committee of unsecured creditors had already investigated the estate assets and that they would share the results of that investigation with the equity committee.

"However, events subsequent to the May 5, 2010 hearing have eviscerated both of these premises," the equity committee said in the motion.

The shareholder group said appointment of an examiner at this time "will allow a full and transparent accounting of the assets of the estates - an accounting that will be vital in shaping the positions of all parties to this case."

The equity committee said appointment of an examiner would also allow an independent review of Washington's Mutual's basis for the proposed global settlement and plan of reorganization.

The committee said this is a new motion based on issues that have developed since the May 5 hearing, and it would withdraw its appeal of the previous examiner motion denial if one is appointed now.

Specifically, the committee said the company and committee claim they have produced all of the documents related to their investigation of claims against the FDIC and JPMorgan, but those documents show that "the scope of their actual investigation was minimal at best."

In addition, the committee said Washington Mutual and the creditors committee have "categorically refused to produce the fruits of their investigation" by claiming various privileges.

The equity committee said the U.S. Trustee for Washington Mutual's bankruptcy case also renewed its request for appointment of an examiner at a June 3 hearing.

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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