The WaMu Lesson: Craft Your Releases Carefully

Law360, New York (January 28, 2011, 1:04 PM EST) -- The U.S. Bankruptcy Court recently denied confirmation of a bankruptcy plan even though it found that the plan's global settlement was "fair and reasonable."[1] Why? Because the plan's releases were too broad and "unreasonable" for many of the constituents. The case provides a pointed lesson to creditors and debtors alike — pay attention to the releases; overdoing it may sink the whole ship.

The plan incorporated a global settlement among Washington Mutual Inc.; JPMorgan Chase Bank NA; the Federal Deposit Insurance Corporation, in its corporate capacity...
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