(Updates with comment from judge in third paragraph.)
Oct. 6 (Bloomberg) -- Washington Mutual Inc., former owner of the biggest U.S. bank to fail, must try to settle differences among shareholders, hedge funds and other creditors before making its third attempt to exit bankruptcy, a judge said.
U.S. Bankruptcy Judge Mary Walrath rejected Seattle-based WaMu’s proposal to limit mediation so the company could try to quickly end its three-year-old bankruptcy and distribute $7 billion to creditors. She set a Nov. 7 deadline for a yet-to-be named mediator to report on whether mediation has succeeded, has failed or needs more time.
“I am not going to have another contested confirmation without trying,” Walrath said at a hearing today in Wilmington, Delaware. She has twice rejected WaMu’s reorganization proposal after holding multiday confirmation hearings involving dozens of lawyers and witnesses arguing about the fairest way to distribute the money.
WaMu filed for bankruptcy on Sept. 26, 2008, the day after its banking unit was taken over by regulators and sold to JPMorgan Chase & Co. for $1.9 billion. Washington Mutual Bank had more than 2,200 branches and $188 billion in deposits.
The case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--Editors: Andrew Dunn, Mary Romano
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