Washington Mutual Inc. defended a judge's decision to keep a $10 billion legal battle in bankruptcy court, on the grounds that JPMorgan Chase & Co. knew it risked a court fight but bought the failing thrift anyway.
JPMorgan Chase tried unsuccessfully to block bankruptcy court lawsuits that are part of the fallout from the deal in favor of a determination in federal court.
Judge Mary Walrath ruled that lawsuits can go forward in the U.S. Bankruptcy Court in Wilmington, Del., because they involve Wamu assets that passed through regulator's hands but that are now in JPMorgan Chase's control.
JPMorgan Chase and the Federal Deposit Insurance Corp. are trying to get in front of a federal appeals court to get an order stopping the bankruptcy court lawsuits, including one initiated by JPMorgan Chase.
Washington Mutual answered JPMorgan Chase's suit by countersuing to reclaim more than $10 billion worth of Wamu assets. The parent company filed a second suit of its own demanding that JPMorgan Chase turn over $4 billion in cash that was in the parent's bank accounts at the time the thrift was taken over.
On Friday, lawyers for Wamu's former parent said allowing the bankruptcy court lawsuits to continue will not jeopardize future efforts by regulators to find buyers willing to take over failed banks.
