Washington Mutual Files Chapter 11 Bankruptcy
Recently, the last of the corporate entities that were Washington Mutual filed for chapter 11 bankruptcy. We here at Savings Accounts 411 knew we should cover this story for you so you’d be appraised of the latest.
Washington Mutual bankruptcy has many new secrets to unveil. The company has recently filed a Chapter 11 reorganization plan with the FDIC. The company has resolved a $4 billion dispute with its parent JPMorgan Chase & Co. The plan, details of which are yet to be revealed in detail and which has to approved by a judge, will create a $7 billion trust fund for paying creditors. JP Morgan Chase has already claimed $4 billion from the trust fund, in deposit accounts.
WaMu files bankruptcy reorganization plan in conjunction with the recent changes at the company. JPMorgan has already agreed to turn over the $4 billion to WaMu under an agreement whereby WaMu will refund up to 70 percent from the tax refunds that are expected from the company’s prior operating losses. The total value is currently estimated at approximately $3 billion.
WaMu will get a 40 percent share of tax refunds from the operating losses incurred during the second round. Total value of the refund is currently estimated to be around $2.6 billion. FDIC will take control of the remaining 60 percent of the refunds.
Chase buys Washington Mutual, this headline shocked the world in 2008 after WaMu filed for Chapter 11 bankruptcy. JPMorgan purchased the company for $1.9 billion from FDIC as the regulator had taken control of WaMu’s assets by then. The failure was the largest in the American banking industry and WaMu has since lost its financial credibility.