A group of Washington Mutual Inc. shareholders is appealing a bankruptcy judge's decision denying the appointment of an examiner to investigate the events surrounding the largest bank collapse in the nation's history.
The committee representing shareholders in Washington Mutual's bankruptcy case is appealing Judge Mary F. Walrath's denial of a probe to look into the failure of the company's bank. That decision earlier this month cleared the way for the bank holding company to move ahead with its exit from bankruptcy under a plan that leaves its shareholders empty handed.
The shareholders are seeking a direct appeal of Walrath's ruling to the 3rd U.S. Circuit Court of Appeals rather than to the U.S. District Court, the usual first stop for bankruptcy court appeals.
They claim that Walrath erred in ruling the appointment of an examiner is "discretionary." The shareholders say the facts in this case mandate the naming of an examiner to determine if litigation over the bank's collapse could add billions in value to the holding company's coffers.
Washington Mutual has reached a deal that would settle a number of legal squabbles over the September 2008 seizure of the bank by federal regulators and its sale to JPMorgan Chase & Co. Walrath is scheduled to consider certification of the appeal at a June 3 hearing, the same day she'll consider preliminary approval of a Chapter 11 plan that is premised on the settlement.