The Washington Mutual bankruptcy is going to fly past the two-year mark after a federal judge granted shareholders’ request to have an independent examiner investigate whether creditors and the WaMu estate are leaving billions on the table in a proposed settlement, according to Reuters and lawyers who were in the courtroom Tuesday.
Judge Mary Walrath’s ruling means that creditors and the WaMu estate must wait a little more than six weeks before they can truly start the process of gathering official support for the proposed plan to end WaMu’s Chapter 11 case. That plan would resolve potential litigation between WaMu and JPMorgan, which purchased WaMu at the height of the financial panic in 2008, and would provide about $6.8 billion in recovery for creditors. Shareholders would receive nothing under that plan. But a committee of shareholders, represented by Susman Godfrey, believe the proposed plan might shortchange the value of certain WaMu assets and of potentially explosive legal claims WaMu might make against JPMorgan. An examiner, to be appointed Monday, will look into all of this.
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