Washington Mutual Inc. (WMI) has announced that it has reached a settlement with some of the creditors involved in its historic Chapter 11 bankruptcy case. As a result of this settlement, the company has filed a new reorganization plan.
The Federal Deposit Insurance Corp. (FDIC) seized WMI's Seattle-based bank in 2008, which was the largest bank failure in U.S. history. The FDIC sold the bank's assets to JPMorgan for $1.9 billion.
WMI, in a press statement, says that the settlement will allow creditors to receive more than $7 billion. The reorganized WMI will be funded by ‘a $75 million contribution from certain creditors,’ according to the company, adding that parties being referred to as the ‘settlement noteholders’ have ‘committed to provide exit financing in the form of a $125 million senior-secured, multi-draw credit facility to fund working capital, general corporate purposes and eligible originations and acquisitions.’
The settlement will need to be approved by the U.S. Bankruptcy Court for the District of Delaware before it can proceed.
‘The comprehensive settlement announced today represents a fair and reasonable recovery for the thousands of equity holders of the company who have been following this case closely for three years,’ says Michael Willingham, chairman of the equity committee appointed in the company's Chapter 11 proceedings. ‘The equity committee and its advisors are pleased with the result and look forward to and support the swift confirmation of the plan.’
Additional details regarding the settlement agreement are available online.