The bankrupt former parent of Washington Mutual Bank has filed a lawsuit against JPMorgan Chase & Co. to recover $4 billion of deposits.
The suit is part of an ongoing feud over the failed company's estate.
Washington Mutual Inc. says the money is being held by its former subsidiary, which JPMorgan Chase bought for $1.9 billion last year. The Seattle holding company has been trying to recover the money since filing for bankruptcy protection in September.
JPMorgan Chase "has no basis to withhold the debtors' funds and the funds are accruing interest at a rate significantly less than what the debtors' estates would otherwise be earning," Washington Mutual Inc. said in papers filed Tuesday in the U.S. Bankruptcy Court for Delaware.
JPMorgan Chase has refused to return the money, saying that it may have a claim on the funds itself, and that it cannot give the plaintiff the money without receiving a so-called set-off right from the bankruptcy court, according to court papers. The set-off would ensure JPMorgan Chase is paid for any claims it has against the company.
The cash has inspired a battle in the bankruptcy case among Washington Mutual Inc.'s creditors and those of its former thrift.
The Federal Deposit Insurance Corp. has said in court papers that it may have a claim on the cash. Bondholders for Washington Mutual Bank have said the withdrawal would be unfair without forcing the former parent to prove it is the rightful owner.