Case Study: In Re Washington Mutual

Law360, New York (October 3, 2011, 1:30 PM EDT) -- Recently, the Delaware Bankruptcy Court denied confirmation of the Modified Sixth Amended Joint Plan (“Modified Plan”) of Washington Mutual Inc. (WMI) and its affiliated debtors (collectively, the “debtors”),[1] thereby again delaying the distribution of about $7 billion in assets, net operating losses with an estimated $17.7 billion in face value and other consideration.

The court concluded that creditors who trade a public debtor’s securities when they merely have knowledge that confidential settlement negotiations are transpiring may be guilty of insider trading, notwithstanding compliance with a protocol...
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