UPDATE 2-WaMu may reach deal soon on $3.7 bln deposit
Thu Mar 4, 2010 1:38pm EST
Stocks
* Deposit was one of WaMu’s largest assets
* Deposit is claimed by WaMu, JPMorgan and FDIC
* Court hearing on dispute postponed for one week (Adds details, background from paragraph 10)
By Tom Hals
WILMINGTON, Del., March 4 (Reuters) – Washington Mutual Inc could reach agreement with JPMorgan Chase & Co and a government agency over a disputed $3.7 billion bank deposit in the next week, the bankrupt company’s attorney told a court on Thursday.
Washington Mutual (WAMUQ.PK) was in court to try to resolve a dispute centering on one of its largest potential assets, billions of dollars that the holding company said was a deposit it had at its banks.
The deposit was seized along with the company’s lending operations in September 2008 in the biggest bank failure in U.S. history.
Washington Mutual’s attorney, Brian Rosen of Weil, Gotshal & Manges, asked the court to adjourn the hearing for one week to give the parties more time for talks. The parties plan to return to court on March 12.
He said the U.S. Federal Deposit Insurance Corp and JPMorgan requested the added time but Washington Mutual was reluctant, an indication that the company might expect a favorable ruling.
He also said there was “momentum” to the negotiations, and Thursday’s hearing was delayed for an hour while the parties held talks in the hallway outside the courtroom.
Bankruptcy Judge Mary Walrath granted the request to postpone the hearing for one week.
During the height of the 2008 financial crisis, Washington Mutual’s banks were seized and immediately sold by the FDIC to JPMorgan (JPM.N) for $1.9 billion. The Seattle-based holding company filed for bankruptcy the next day.
JPMorgan has described Washington Mutual’s bookkeeping as a “shell game” and said the money might have been a capital contribution that allowed the bank to meet regulatory requirements.
In October, Washington Mutual argued before Walrath for a summary judgment determining that the company owned the deposit. Walrath has not issued a ruling.
Separately, the FDIC asked the judge to allow it to invoke a clause in its sale agreement with JPMorgan and take back the disputed deposit.
Both the FDIC and JPMorgan have said they have claims on the bankrupt estate of Washington Mutual that exceed the amount of the deposit.
The case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware, No. 08-12229. (Reporting by Tom Hals, editing by Gerald E. McCormick)
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