Judge seeks extension of WaMu deal deadline

By Tom Hals

WILMINGTON, Delaware (BestGrowthStock) – A judge said on Monday she needs more time to rule on Washington Mutual’s $10 billion deal aimed at bringing the company out of bankruptcy, and asked the parties to extend a key deadline, according to court documents.

The settlement among Washington Mutual (WAMUQ.PK: ), JPMorgan Chase & Co (JPM.N: ) and the Federal Deposit Insurance Corp divides billions of dollars of disputed assets.

The deal agreement required court approval by December 31, and Judge Mary Walrath of Delaware’s bankruptcy court said she would not meet that deadline. She ordered the parties to advise her by December 29 if they would extend the deadline for her opinion to January 31.

JPMorgan and Washington Mutual declined to comment. The FDIC did not immediately return a call for comment.

The deal is at the heart of Washington Mutual’s reorganization plan and provides most of $7 billion that the company plans to distribute to its creditors to pay off its debts. The rest is divided between JPMorgan Chase and the FDIC.

The company filed for Chapter 11 in September 2008 the day after regulators seized its WaMu savings and loan in the biggest bank failure in U.S. history.

The seized bank was immediately sold by the FDIC to JPMorgan for $1.88 billion.

The bank seizure and sale set off 18 months of legal battles over ownership of cash, tax refunds and other assets.

The court held four days of hearings on the deal and the company’s reorganization plan, which was opposed by shareholders and other investors who are unlikely to recover anything in the bankruptcy.

The case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware, No. 08-12229.

(Reporting by Tom Hals, editing by Dave Zimmerman)

Judge seeks extension of WaMu deal deadline