Washington Mutual Bankruptcy Plan
After the (much disputed) seizure of Washington Mutual’s assets and selloff to JP Morgan Chase (Chase Bank), what’s left of Washington Mutual has been in legal battles over who gets paid what. The WaMu bankruptcy has been one of the most-contested in the nation following one of the largest bank failures in the U.S.
A new Washington Mutual bankruptcy plan has been offered in which $7 billion would be returned to creditors. The problem now is getting the FDIC to go along with the plan. The FDIC, in turn, must get Chase to agree to a modification of its terms for the buyout and original bankruptcy and Washington Mutual assets trade.
Some blame the whole boondoggle on WaMu, others on Chase for grabbing too fast, and still others on the government for being too hasty in their seizure and forced Washington Mutual bankruptcy. Whoever gets the blame doesn’t matter much since the final outcome is the same: it all needs to finish.
The trouble is, there are billions at stake, so no one is willing to just back off. WaMu’s contention has been that many of the assets taken from them were not part of the banking that the FDIC seized while Chase has said that those assets were part of the buyout deal they penned with the FDIC. So nearly $7 billion sits in limbo and has for more than 18 months.
The FDIC has said they are considering the new plan, but JP Morgan Chase has made it clear that they don’t support the new Washington Mutual bankruptcy plan.
In the end, billions of dollars and creditors who’ve waited almost two years to be repaid hang in the balance.