WaMu investors appeal plan ruling
DOVER, Del. — Shareholders of Washington Mutual Inc. filed court papers yesterday challenging a Delaware bankruptcy judge’s ruling that a proposed legal settlement underlying the company’s reorganization plan is fair and reasonable.
In its court filing, WaMu’s official panel of equity security holders questioned the fairness of the proposed deal when the company has presented no evidence of any legal analysis of the merits of the claims. The shareholders argue that Judge Mary Walrath substituted her own legal analysis about the claims instead of relying on the evidentiary record.
At a December hearing, shareholders and other investors challenging WaMu’s plan urged Walrath to exclude testimony from bank officials about the reasonableness of the settlement. They argued that the officials’ conclusions were based on attorney-client discussions that have been kept from opponents of the plan. Walrath refused to exclude the testimony but said the opinions offered by WaMu executives would not influence her decision. She also noted WaMu was “walking a fine line’’ in trying to defend its plan without showing what attorneys thought about various legal claims that are potentially worth billions to the bankruptcy estate.