WaMu Judge Won’t Release Documents on Examiner Ruling
Dec. 17 (Bloomberg) -- The judge overseeing Washington Mutual Inc.’s bankruptcy refused to make public the confidential documents she used to justify an investigation of the legal claims surrounding the biggest U.S. bank failure.
U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Delaware, today denied a request by a shareholder of Seattle- based WaMu to unseal the documents, which the company claimed were confidential because they were covered by attorney-client privilege. Walrath said if she released the documents, then a long list of materials that are currently confidential would also become available to the public.
Charles J. Brown III, an attorney for the shareholder, argued that the documents should be public because Walrath relied on them to appoint an examiner to investigate a $10 billion settlement among WaMu, federal regulators and JPMorgan Chase & Co.
“This was presented to the court,” Brown said in court. “It can’t be a star-chamber proceeding where documents are submitted without anybody seeing them.”
The ruling was the latest in a dispute over the confidential advice WaMu got from its attorneys related to the settlement and a $7 billion payout proposal. At a court hearing earlier this month, WaMu fought with shareholders and lower- ranking creditors over whether that advice was being used to justify the settlement and the payout plan.
Insurance Unit
Walrath has yet to decide whether to approve the settlement and payout plan, which would end the company’s bankruptcy and allow a WaMu insurance unit to exit court protection.
WaMu filed for bankruptcy on Sept. 26, 2008, the day after its banking unit was taken over by regulators and sold to JPMorgan for $1.9 billion. Before it failed, Washington Mutual Bank had more than 2,200 branches and $188 billion in deposits.
Shareholders claim New York-based JPMorgan didn’t pay enough, and that federal regulators were too quick to close the bank. JPMorgan and federal regulators deny those claims in court papers.
The case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--Editors: Fred Strasser, Andrew Dunn
To contact the reporter on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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