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The Work
June 2, 2010 5:27 PM
Everyone Else Tells WaMu Shareholders: Please, Stop It
Posted by Zach Lowe
The committee representing Washington Mutual shareholders has managed to do something pretty extraordinary: unite almost every other party in the case against its request for discovery and an extended investigation into WaMu's collapse, according to court records.
As we reported last week, the committee of shareholders (represented by Susman Godfrey after previous relationships with Venable and Dewey & LeBoeuf apparently didn't work out) asked Judge Mary Walrath of federal bankruptcy court in Delaware for permission to conduct wide-ranging discovery into WaMu's collapse. The bank's estate, represented by Quinn, Emanuel, Urquhart & Sullivan and Weil, Gotshal & Manges, started an identical round of discovery last year in an attempt to see whether it could go after JPMorgan Chase for damages related to WaMu's demise. The estate argued that JPMorgan sabotaged potential bids for WaMu in late 2008 by leaking confidential WaMu data and spreading rumors about WaMu's financial condition. The FDIC eventually placed WaMu in a receivership and sold it to JPMorgan for $1.9 billion.
But the estate cut its investigation short after striking a preliminary deal with JPMorgan that would end the potential litigation, return most of about $4 billion in deposits to WaMu's estate, and govern the distribution of tax refunds to various entities in the case. The estate was satisfied that the deal, which needs approval from the court and the FDIC, would bring in a decent chunk of money for creditors.
The shareholders disagree, and they want to conduct the same broad discovery the WaMu estate started as part of its investigation into JPMorgan. The response of the other parties has been unanimous: They all want Judge Walrath to shoot down the request. The estate claims in court papers filed today that shareholders are asking for attorney work product, including internal deliberations among Quinn lawyers in which they debate how to proceed against JPMorgan. The FDIC, represented by DLA Piper, says in papers filed Wednesday that the shareholders are "an out-of-the-money constituency that has every incentive to continue litigation regardless of how remote its chance for success and regardless of the impact on other parties." In other words, the shareholders will recover nothing under the proposed settlement and are flailing away to try and recover something. The Federal Reserve, which would have to turn over documents if Judge Walrath grants the shareholders' full request, also objected, as did the creditors committee in the case. All of those parties agree that the matter has been adequately investigated, and that it is time to move forward on the proposed settlement and bring the estate out of Chapter 11.
A massive hearing is scheduled on the proposed settlement and the WaMu reorganization plan for Thursday. We'll let you know how it goes.
Contact reporter Zach Lowe at zlowe@alm.com.
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Pssst. Zach! Over here!
"I think the equity committee is fully able to conduct the investigation that it seeks to have the examiner conduct. It has the benefit of Rule 2004, it has the benefit of the discovery rules, because there are contested matters presently and anticipated in which the equity committee could fully avail itself of that discovery. But, again, I'm strongly urging the committee and the debtor to provide all the information to the equity committee without testing the Court's patience with discovery motions."
Judge Mary Walrath, May 5th Court Transcript
Comment By Primtah - June 2, 2010 at 6:55 PM
Zach Lowe,
You are misinformed or paid-off to be misinforming. On second thought: you are probably both.
FYI--the US TRUSTEE, FROM THE DOJ(Dept. of Justice) also filed an appeal today 6/2 to make sure that there is an examiner in this case.
It is a case about 10's if not 100' of Billions stolen, and the cover-up.
Are you that obtuse?
Comment By ifinew - June 2, 2010 at 9:44 PM
PPS--
ZACH LOWE,
I did a bit of research and see that ALM Media---the guys who own you are connected to JPMP.
SO--you are a tool. A propaganda tool. Get an honest job that doesn't try to steal the life savings of honest Americans.
Comment By ifinew - June 3, 2010 at 12:26 AM
Zach, you journalistic hack. Why are you prostituting yourself for JP Morgan? Could it be because, if fact, AmLaw Daily is actually owned by JPM? Did you disclose that little conflict of interest to your readers? Why not? Could it be because, like "everyone else"in the WaMu litigation who want the shareholders to shut up and allow themselves to be robbed, you have a vested interest in going along with JPM's heist? Maybe it's time to go back to journalism school and retake the class on ethics before you pontificate on things you don't seem to know much about and applaud the theft of hard-working citizens' retirement funds.
Comment By Doug Southard - June 3, 2010 at 12:38 AM
Interesting delivery, but an informative article. Now are you making the suggestion that "Everyone" is in the right here, or should we be focussed on why "Everyone" might be trying to hide something?
Comment By WAMUCurious - June 3, 2010 at 1:45 AM
Do you always delete comments that don't agree with you position?
Comment By KnowYourGame - June 3, 2010 at 2:13 AM
Word is that you are owned by JPMorgan. Not even a disclosure to that effect? Not exactly ethical, are we?
Comment By Eric - June 3, 2010 at 2:39 AM
Zach:
I thought part of being a journalist is being objective and present both sides of the argument. In your article, you cited what the FDIC said without giving the other side a chance to counter it. What school of journalism did you go to?
This is the reason why people stop trusting the government and the media.
Comment By Where's the truth? - June 3, 2010 at 4:25 AM
Shameless reporting. Absolutely biased.
Comment By Gerald Xu - June 3, 2010 at 5:26 AM
Would you trust the FDIC, or JPM, or for that matter any of the people who put Wamu in this postion to begin with on any discovery info.It seems the people who collapsed wamu are making deals so they can continue thier corrupt ways as soon as possible.
Comment By william king - June 3, 2010 at 8:28 AM
WTF?? This was not an editorial or an opinion piece. What's up with bashing Lowe on this? He's reporting what happened. Nowhere in this article does he state or imply anything suggesting one side is more right than the other.
FFS people, there's plenty of times we can spew venom but this is definitely not one of them. Get a reality check and read the bleeding article first.
Comment By RP - June 3, 2010 at 10:34 AM