 Judge delays ruling on WaMu turnover requestJudge hears arguments in fight between WaMu and JPMorgan over deposits
- By Randall Chase, AP Business Writer
- On 1:58 pm EDT, Thursday October 22, 2009
WILMINGTON, Del. (AP) -- The judge presiding over Washington Mutual Inc.'s bankruptcy protection case declined to issue an immediate ruling Thursday on the company's request that JPMorgan Chase & Co. be ordered to turn over some $4 billion in disputed assets. {"s" : "jpm,wamuq.pk","k" : "c10,l10,p20,t10","o" : "","j" : ""} After hearing more than two hours of arguments, Judge Mary Walrath said she would take WMI's request to grant it summary judgment without a trial under advisement. Walrath gave no indication when she might issue a ruling. WMI, parent company of Washington Mutual Bank, filed for Chapter 11 reorganization along with its Washington Mutual Investment Corp. affiliate last year, one day after the Office of Thrift Supervision appointed the Federal Deposit Insurance Corp. as receiver for Washington Mutual Bank and its banking subsidiaries, including Washington Mutual Bank fsb in what was the largest bank failure in U.S. history. After being appointed receiver, the FDIC sold substantially all of WaMu's banking assets to JPMorgan Chase for $1.9 billion. In a lawsuit filed earlier this year, WMI claimed that JPMorgan has refused to turn over billions of dollars in deposit accounts at the WaMu banks that are part of its bankruptcy estate and needed to pay creditors. JPMorgan has suggested that the money was included in the assets sold to it by the FDIC, and that WMI's transfer of $3.67 billion from WaMu to WaMu fsb, a subsidiary, was a capital contribution, not a deposit transfer, and thus belongs to JPMorgan. JPMorgan also contends it has a right to hold onto the funds to compensate for other claims it might have against WMI. Attorneys for JPMorgan and the FDIC argued Thursday that a full evidentiary record and trial are needed before the court can determine the rightful owner of the assets. But David Elsberg, an attorney for WMI, asserted that there are no material issues of fact regarding the deposit accounts. "There is no serious dispute that these are our funds," Elsberg told Walrath, adding that questions raised by JPMorgan about the accounts and transfers are simply an attempt to divert attention from the fact that it cannot assert ownership. After gathering information over the past 13 months and submitting more than 100,000 pages of documents to the court, JPMorgan cannot produce a single witness to testify that it owns the funds in question, Elsberg claimed. "Everything else is a sideshow, your honor ... Their own affidavits confirm these are our deposits," he said. Robert Sacks, an attorney for JPMorgan, countered that WMI wants court authorization to claim the $4 billion "without a shred of discovery" in the lawsuit. Sacks said JPMorgan has been unable to find any agreements governing terms of the deposit accounts, which he said may be only book entries, and that several issues surrounding the $3.67 transfer are in dispute. "We don't have a single person who was involved in the substantive elements of these transactions," he said. Sacks also suggested there was a "disconnect" between the largest bank failure in U.S. history and WMI's claim that "they somehow have some $4 billion in cash sitting at that institution." |
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