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Washington Mutual files revised reorganization plan with FDIC

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Washington Mutual (WMI) has filed with the US Bankruptcy Court for the District of Delaware an amended plan of reorganization and disclosure statement. The plan implements and incorporates the terms of a revised global settlement agreement reached among WMI, the Federal Deposit Insurance Corporation (FDIC) and JP Morgan Chase Bank (JPMC).

As previously announced, the plan under which the settlement will be implemented contemplates, among other things: Washington Mutual will establish a liquidating trust to make distributions to creditors on account of their allowed claims. In accordance with the terms of the plan, the trust will distribute funds in excess of approximately $7bn, including approximately $4bn of previously disputed funds on deposit with JPMC.

It is anticipated that the reorganized WMI will undertake a rights offering pursuant to which certain creditors will receive a right to purchase newly issued shares of reorganized WMI common stock. The reorganized WMI will retain equity interests in WMI Investment and WM Mortgage Reinsurance Company.

JPMC will assume certain liabilities related to benefit plans (including the pension plan sponsored by WMI). The various litigations involving WMI, JPMC and FDIC will be stayed or dismissed.

In addition, JPMC and the FDIC (in its capacity as receiver of Washington Mutual Bank and in its corporate capacity) will withdraw claims against WMI's bankruptcy estate and the parties will exchange mutual releases. Preferred and common equity securities previously issued by WMI will be canceled.