WaMu Noteholders' Claims Pushed To Back Of Line

Law360, New York (January 6, 2011, 7:47 PM EST) -- Washington Mutual Bank NA noteholders on Thursday had their securities misrepresentation claims subordinated to the lowest rung of creditors in the bankruptcy case of the defunct bank’s former parent Washington Mutual Inc.

At a hearing in the U.S. Bankruptcy Court for the District of Delaware, Judge Mary F. Walrath made the distinction that the noteholders’ interests in WMB alone did not give rise to claims against WMI and ordered the misrepresentation claims subordinated under section 510(b) of the bankruptcy code.

The noteholders — who collectively have...
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