Judge Nixes WaMu Ch. 11 Plan, Sends Parties To Mediation

Law360, New York (September 13, 2011, 11:34 PM EDT) -- A Delaware bankruptcy judge on Tuesday denied Washington Mutual Inc.'s sixth attempt at a reorganization plan, and sent the bank holding company and its plan objectors to mediation before the case "devolves into a litigation morass."

U.S. Bankruptcy Judge Mary F. Walrath said shareholders had stated colorable claims that WMI engaged in insider trading in forging the Chapter 11 plan, but she added that they should try to settle those claims in the interest of avoiding expensive litigation that will only drain WMI's assets.

"Before the...
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