WILMINGTON, Del. — A judge denied a bid by shareholders seeking to launch a fresh investigation into the downfall of Washington Mutual Bank as part of its parent company's Chapter 11 case.
Judge Mary F. Walrath of the U.S. Bankruptcy Court in Wilmington, Del., rejected arguments by shareholders who insisted that the "independent voice" of an examiner was needed to dig deeper into the circumstances that pushed Washington Mutual Inc. into bankruptcy 19 months ago.
The failure of the company's bank, known as WaMu, has "been investigated to death," she said. "I'm sure even the most experienced and talented examiner...could not find any stone unturned."
Her reasoning fell into line with arguments made by attorneys for the company and the committee representing its unsecured creditors. They noted that the unsecured creditors already conducted their own investigation and said that any further efforts by an examiner would be redundant and wasteful of the company's assets.
Brian Rosen, an attorney representing Washington Mutual, also accused the shareholders of using the examiner request to try to delay the proceedings to give them more time to work to oust the company's management and derail a proposed settlement that forms the backbone of the company's reorganization plan.
"This a stall game that is being played," said Rosen, of Weil, Gotshal & Manges LLP.
Walrath disputed Rosen's accusations, saying she didn't think the shareholders were using the request as a "litigation tactic" but were seeking to explore the possibility that there was additional value in the company.
Washington Mutual sought bankruptcy protection in September 2008 following the seizure and eventual sale of WaMu to JPMorgan Chase & Co. by federal regulators.