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Trust Preferred Investors Seek Halt To Washington Mutual Case
Daily Bankruptcy Review, December 27, 2011,
Investors who hold $1.5 billion worth of trust preferred securities have moved to keep Washington Mutual Inc. bottled up in bankruptcy while they take their case for payment to a higher court....
Investors who hold $1.5 billion worth of trust preferred securities have moved to keep Washington Mutual Inc. (WAMUQ) bottled up in bankruptcy while they take their case for payment to a higher court.
If successful, the action could mean more delay for creditors who have been waiting for years for Washington Mutual to distribute the more than $7 billion cash it stacked up in bankruptcy.
Washington Mutual is due in court Jan. 11, 2012, to debut the latest in a series of settlements it has struggled to put together to end fighting in its case. A pact with shareholders who twice blocked Washington Mutual's exit from Chapter 11 could ease the company out of bankruptcy during the first quarter of 2012.
Investors in the trust preferred securities, however, say that can't happen without erasing their legal rights. They are asking Judge Mary Walrath to stay action on confirmation of Washington Mutual's Chapter 11 plan on the grounds that "serious property and due process issues" are at stake.
Tuesday, a Washington Mutual spokesman declined comment on the bid for a stay, which is also scheduled for a hearing Jan. 11.
Investors in Washington Mutual's trust preferred securities say the securities belong to them rather than to the bankrupt company. If the securities are handed over under the Chapter 11 plan before a federal court hears their appeal of an adverse bankruptcy court ruling, they will be deprived of their day in court as well as their property, attorneys for the trust preferred holders said in papers filed with the U.S. Bankruptcy Court in Wilmington, Del.
As long as the trust preferred securities investors are appealing an earlier ruling by Walrath to a federal court, they contend, she doesn't have jurisdiction to confirm Washington Mutual's Chapter 11 plan.
Former parent of Washington Mutual Bank, or WaMu, the company has been trying since 2008 to settle the storm of legal trouble that erupted when WaMu went under in the biggest banking collapse in U.S. history.
A settlement with regulators and with J.P. Morgan Chase & Co. (JPM), which bought WaMu, has survived two rounds of confirmation fights in Washington Mutual's Chapter 11 case.
Part of the settlement gives the trust preferred securities to J.P. Morgan, in what is a key component of the Washington Mutual Chapter 11 plan.
Walrath ruled investors who owned the trust preferred securities as WaMu teetered toward ruin lost their property in the events of September 2008, when regulators marched in and seized the thrift.
The trust preferred holders appealed her ruling to a federal district court nearly a year ago. Judge Gregory Sleet of the U.S. District Court in Wilmington is weighing their arguments but has yet to rule on the appeal.
Until Sleet rules, the trust preferred investors say, Walrath is without authority to allow Washington Mutual to hand over the securities to J.P. Morgan, which it must do to get out of bankruptcy.
www.fis.dowjones.com/...11227e7cribgaa&r=Rss&s=DJFDBR
Daily Bankruptcy Review, December 27, 2011,
Investors who hold $1.5 billion worth of trust preferred securities have moved to keep Washington Mutual Inc. bottled up in bankruptcy while they take their case for payment to a higher court....
Investors who hold $1.5 billion worth of trust preferred securities have moved to keep Washington Mutual Inc. (WAMUQ) bottled up in bankruptcy while they take their case for payment to a higher court.
If successful, the action could mean more delay for creditors who have been waiting for years for Washington Mutual to distribute the more than $7 billion cash it stacked up in bankruptcy.
Washington Mutual is due in court Jan. 11, 2012, to debut the latest in a series of settlements it has struggled to put together to end fighting in its case. A pact with shareholders who twice blocked Washington Mutual's exit from Chapter 11 could ease the company out of bankruptcy during the first quarter of 2012.
Investors in the trust preferred securities, however, say that can't happen without erasing their legal rights. They are asking Judge Mary Walrath to stay action on confirmation of Washington Mutual's Chapter 11 plan on the grounds that "serious property and due process issues" are at stake.
Tuesday, a Washington Mutual spokesman declined comment on the bid for a stay, which is also scheduled for a hearing Jan. 11.
Investors in Washington Mutual's trust preferred securities say the securities belong to them rather than to the bankrupt company. If the securities are handed over under the Chapter 11 plan before a federal court hears their appeal of an adverse bankruptcy court ruling, they will be deprived of their day in court as well as their property, attorneys for the trust preferred holders said in papers filed with the U.S. Bankruptcy Court in Wilmington, Del.
As long as the trust preferred securities investors are appealing an earlier ruling by Walrath to a federal court, they contend, she doesn't have jurisdiction to confirm Washington Mutual's Chapter 11 plan.
Former parent of Washington Mutual Bank, or WaMu, the company has been trying since 2008 to settle the storm of legal trouble that erupted when WaMu went under in the biggest banking collapse in U.S. history.
A settlement with regulators and with J.P. Morgan Chase & Co. (JPM), which bought WaMu, has survived two rounds of confirmation fights in Washington Mutual's Chapter 11 case.
Part of the settlement gives the trust preferred securities to J.P. Morgan, in what is a key component of the Washington Mutual Chapter 11 plan.
Walrath ruled investors who owned the trust preferred securities as WaMu teetered toward ruin lost their property in the events of September 2008, when regulators marched in and seized the thrift.
The trust preferred holders appealed her ruling to a federal district court nearly a year ago. Judge Gregory Sleet of the U.S. District Court in Wilmington is weighing their arguments but has yet to rule on the appeal.
Until Sleet rules, the trust preferred investors say, Walrath is without authority to allow Washington Mutual to hand over the securities to J.P. Morgan, which it must do to get out of bankruptcy.
www.fis.dowjones.com/...11227e7cribgaa&r=Rss&s=DJFDBR
