Washington Mutual Inc. has agreed to pay $20 million to quiet retiree accusations of getting short-changed by a switch in the company's pension calculation methodology.
The former parent of Washington Mutual Bank, or WaMu, is operating under bankruptcy protection and is trying to work its way through a tangle of legal and financial complications left behind when regulators seized WaMu.
JPMorgan Chase & Co. bought the thrift in September 2008, shortly after regulators declared that it was in danger of collapse and seized it. Washington Mutual's pension plans will be handed over to JPMorgan if a proposed global settlement of lawsuits over the loss of WaMu ultimately wins court approval.
Documents outlining the proposed pension lawsuit settlement say the financial commitment will be the responsibility of the company that gets the pension plans--J.P. Morgan, if the global settlement goes through.
Lawyers for Washington Mutual will get $1 million or less, and lawyers for the pension-plan participants will be paid about $4.2 million of the settlement fund for their work on the case. The rest of the settlement fund will be distributed through the pension plans themselves, by way of an increase in the amount of funding earmarked for the older retirees.
They will see an increase in benefits, in line with their share of the settlement amount, according to a filing with the U.S. Bankruptcy Court in Wilmington, Del.
Washington Mutual has already presented the class-action lawsuit settlement to a federal district court for a preliminary review. It will be reviewed for fairness at a hearing in October.
Approval of the bankruptcy court is also necessary, because Washington Mutual's financial commitments are subject to court oversight as long as the company remains in Chapter 11.