By Peg Brickley Of DOW JONES DAILY BANKRUPTCY REVIEW Washington Mutual Inc. (WAMUQ), the former parent of Washington Mutual Bank, has abandoned hope of getting out of bankruptcy this year due to ongoing fights with JPMorgan Chase & Co. (JPM), new owner of the failed thrift. In a filing late Monday in the U.S. Bankruptcy Court in Wilmington, Del., the bank holding company sought an extension until Jan. 19, 2010, of the deadline by which it must file a Chapter 11 plan. "Unresolved contingencies" are to blame for holding up the process of formulating a scheme to distribute Washington Mutual's remaining assets to creditors, according to court papers. Early in Washington Mutual's Chapter 11 case, officials said they hoped to get a plan on file by the end of 2009, setting out how it would hand out cash, including $4 billion on deposit at WaMu when it was taken over by regulators. Creditors of both the thrift and its parent company fault the "extremely rushed and flawed" sale of WaMu to JPMorgan Chase, which they say left the bank accounts and billions of dollars worth of other assets in the wrong hands. Hopes of an early deal have faded, however, as JPMorgan and Washington Mutual Inc. sue and countersue each other, and occasionally the Federal Deposit Insurance Corp., over the cash, tax refunds and other assets. "It is extremely difficult, if not impossible, for (Washington Mutual) to propose a feasible plan unless they know the amount of assets available for distribution to creditors," lawyers for the company wrote Monday, explaining their need for more time to propose a Chapter 11 plan. JPMorgan and Washington Mutual are quarreling in courts in Delaware and Washington, D.C., over exactly what went with WaMu when it was sold. Parent company Washington Mutual Inc. says it, like every other WaMu depositor, is entitled to the cash that was in its bank accounts when the thrift was seized and sold. JPMorgan says the account cash should be treated like a capital contribution from the responsible parent to the ailing subsidiary. Investors in Washington Mutual's stock and debt have been eyeing the court contests closely, hoping for signs of a break in the barrage of litigation that means they could see their money quickly. Legal wrangling has only intensified, provoking a Sept. 25 rebuke to JPMorgan from bankruptcy Judge Mary Walrath, who called JPMorgan's arguments "frivolous" three times in five sentences. Monday, parent company lawyers said the fight with JPMorgan "has proven to be a hurdle, and even a distraction, from plan formulation," diverting the attention of lawyers who would otherwise be sifting through the 3,700 claims filed against Washington Mutual in bankruptcy court. (Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.) -By Peg Brickley, Dow Jones Daily Bankruptcy Review; 302-521-2266; peg.brickley@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=JTWHI1YqCLssKIlIyDNCUQ%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires October 20, 2009 10:42 ET (14:42 GMT) Copyright (c) 2009 Dow Jones & Company, Inc. |