Status of Washington Mutual Bank Receivership
On September 25, 2008, the Federal Deposit Insurance Corporation was appointed the Receiver for Washington Mutual Bank ("WAMU"). The Receiver transferred substantially all WAMU's assets and liabilities to JPMorgan Chase ("JPMC") pursuant to a Purchase and Assumption Agreement dated September 25, 2008 - PDF ("P&A Agreement"). The next day, Washington Mutual Inc. ("WMI"), the holding company for WAMU, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware (assigned to Judge Mary F. Walrath). Thereafter, WMI, JPMC, the FDIC, in its Corporate capacity, and the Receiver became involved in several lawsuits contesting the ownership of over $20 billion in assets.
The parties reached a settlement in the WMI bankruptcy proceeding that was approved by the FDIC's Board of Directors on May 20, 2010, and WMI filed a plan of reorganization incorporating the terms of the settlement ("WMI Bankruptcy Settlement"). Several parties objected to WMI's proposed plan, and in particular, WMI's proposal to release its claims against JPMC, the FDIC and the Receiver. At the request of WMI's equity holders, the Bankruptcy Court appointed an Examiner to thoroughly investigate WMI's claims against JPMC, the FDIC and the Receiver, and to determine whether the proposed settlement (which would release these claims) was fair and equitable to WMI. The Examiner found that the WMI Bankruptcy Settlement was a fair resolution.
On February 24, 2012, the Bankruptcy Court entered an order confirming the seventh amended plan - PDF proposed by WMI and its co-debtor WMI Investment Corp (the "Plan"). The WMI Bankruptcy Settlement - PDF, as amended from time to time, remains integral to and incorporated in the Plan. The Plan and Settlement became effective on March 19, 2012. The Receiver received $843.9 million pursuant to the terms of the WMI Bankruptcy Settlement.
As of June 30, 2016, the Receiver had approximately $2.76 billion to distribute to holders of claims allowed by the receivership, according to the priorities established in 12 U.S.C. § 1821(d)(11)(A). The most recent receivership balance sheet summary can be found at the following link: (WAMU Quarterly Receivership Balance Sheet Summary). Before the Receiver can distribute these funds, however, it must pay administrative expenses and resolve a number of lawsuits that have been filed against it, the largest of which was filed by Deutsche Bank National Trust Co. (“DBNTC”) claiming $6 billion to $10 billion in damages arising out of WAMU's alleged breach of representations and warranties made in connection with mortgages sold to securitized trusts. (Amended Complaint - PDF). In June 2015, the court issued a partial summary judgment decision finding that the Receiver retained liability for DBNTC’s claims, to the extent that such claims were not reflected at a stated book value in the financial accounting records of WAMU as of the failure date. (Amended Memorandum Opinion - PDF). The Receiver sought appellate review of the decision.
Also, JPMC filed a lawsuit seeking indemnification against the Receiver (Indemnification lawsuit - PDF) and submitted over 100 notices of potential indemnity claims. (Notices can be found at Group 1: JPMorgan Chase Notices relating to Washington Mutual Whole Bank P&A - PDF in the Freedom of Information Act (FOIA) Service Center Reading Room and, JPMorgan Chase Notices relating to Washington Mutual Bank Whole Bank P&A at, Group 2: JPMorgan Chase Notices relating to Washington Mutual Whole Bank P&A).
On August 19, 2016, the FDIC Board of Directors approved a settlement among the Receiver, DBNTC and JPMC, which would settle the lawsuit filed by DBNTC, the Indemnification lawsuit filed by JPMC and all claims for indemnification made by JPMC against the Receiver, including two other lawsuits disputing JPMC’s responsibility for tax liabilities of the failed WAMU (“DBNTC-JPMC-FDIC Settlement”). In exchange for releases from JPMC and DBNTC, the Receiver will pay JPMC $645 million in cash in settlement of its administrative claims in the receivership and will give DBNTC an allowed general unsecured receivership claim for $3,006,929,660. The DBNTC-JPMC-FDIC Settlement agreement can be found at this link: DBNTC-JPMC-FDIC Settlement agreement - PDF.
The DBNTC-JPMC-FDIC Settlement remains subject to judicial approval in a procedure to be filed by DBNTC in California, and if approved, will result in the dismissal of the four WAMU-related actions pending in the U.S. District Court for the District of Columbia and the appeal pending in the U.S. Court of Appeals for the District of Columbia Circuit.