Washington Mutual is the biggest bank to fail in U.S. history. As the bank is emerging from Chapter 11 bankruptcy proceedings, it is engaged in a shareholder dispute and a dispute with some of the bank’s creditors. Now the bank has finally reached an agreement between the two parties.
The chairman of the Equity Committee said that both the committee and “its advisors are pleased with the result and look forward to and support the swift confirmation of the plan.” Since regulators took the bank’s savings and loan in September 2008, the bank has struggled. Now, Washington Mutual is finally in a position to move forward.
Under the new plan, Washington Mutual will be able to distribute about $7 billion to creditors. Although that will not be the end of the Chapter 11 process, it is certainly a step in the right direction.
The reorganized assets of Washington Mutual include its equity interest in WMI Investment Corp and WM Mortgage Reinsurance Co Inc. Some of Washington Mutual’s creditors are also giving the bank $75 million, and Washington Mutual will receive a $125 million line of credit from the noteholders.
Washington Mutual’s current preferred and common equity holders will receive the majority of common equity.
Earlier this year, Washington Mutual tried to end its bankruptcy. However, because there were disputes between the shareholders and noteholders, the attempt was rejected by the judge. When the dispute continued, the judge ordered Washington Mutual to participate in mediation.
Source: Reuters, “WaMu settles disputes, eyes bankruptcy exit,” Dec. 13, 2011