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Bankruptcy Keyed to Levitan, 3rd Ed.
In re Washington Mutual, Inc.
Citation:
442 B.R. 314 (2011)Facts
WMI was a bank holding company that formerly owned WMB, which had over 2,200 branches and held $188.3 billion in deposits. In September 2008, during a global credit crisis, WMB experienced a bank run with over $16 billion in deposits withdrawn in a ten-day period. On September 25, 2008, the OTS seized WMB and appointed the FDIC as receiver. The FDIC sold substantially all of WMB’s assets to JPMC for $1.88 billion plus the assumption of over $145 billion in deposit and other liabilities. The next day, WMI filed for Chapter 11 bankruptcy.
Disputes arose between WMI, JPMC, and the FDIC regarding ownership of numerous assets, including approximately $4 billion in deposit accounts, $5.5-5.8 billion in tax refunds, Trust Preferred Securities worth $4 billion, intellectual property, pension plans, and proceeds from litigation. These parties engaged in multiple adversary proceedings and contested matters. After extensive litigation, the parties announced a Global Settlement on March 12, 2010, which was incorporated into WMI’s Plan.
The Global Settlement provided for the resolution of all disputes regarding the disputed assets, with WMI receiving approximately $6.1-6.8 billion in readily available funds. The Plan proposed to pay creditors in full plus post-petition interest, with the lowest class of creditors receiving approximately 74% of their claims plus rights to participate in an offering of stock in the Reorganized Debtor. The Plan included various releases of claims against JPMC, the FDIC, and other parties.
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