WaMu lists $8 billion debt in bankruptcy filing

/ Source: The Associated Press

The holding company for Washington Mutual, the thrift that was seized by the Federal Deposit Insurance Corp. last week and had its banking assets sold to JPMorgan Chase & Co. for $1.9 billion, lists debts of more than $8 billion in a Delaware bankruptcy filing.

Washington Mutual Inc. filed for Chapter 11 bankruptcy protection late Friday in U.S. Bankruptcy Court in Wilmington, listing almost $33 billion in assets and $8.1 billion owed to creditors.

In its filing, WMI said it planned to ask the court for an extension of time or a waiver for submitting a complete list of creditors and equity securities holders. TPG Capital, which led a $7 billion cash infusion in the bank this spring, was the only entity listed in Friday's filing as holding 5 percent or more of WMI's securities.

The company listed the Bank of New York as the trustee for unsecured holders of 13 separate debt issuances, which range from $176 million to $1.1 billion

"The debtor believes that its public debt may be widely held, however, the debtor was unable to determine with certainty the number of beneficial holders for each issuance of debt securities," the company said in a footnote to its filing. "Therefore, out of an abundance of caution, all of the debtor's debt issuances are detailed herein."

The bankruptcy filing, which includes both WaMu and its WMI Investment Corp. subsidiary, estimated the number of creditors as between 5,000 and 10,000.

Washington Mutual is being represented in the bankruptcy proceedings by Weil, Gotshal and Manges, which also is handling the bankruptcy of Lehman Brothers.

The seizure of Seattle-based Washington Mutual, a 119-year-old firm with more than $300 billion in assets, marked the largest bank failure in U.S. history.

The seizure had been widely anticipated because of the company's heavy mortgage-related losses, which sent its stock plummeting 95 percent from a 52-week high of $36.47 to its close of $1.69 Thursday. Federal regulators said last week that an outflow of deposits that began on Sept. 15 reached $16.7 billion, and that without sufficient cash to meet its obligations, WaMu not able to transact business.

The seizure of WaMu by the government means shareholders' equity was wiped out, leaving private equity investors, including TPG Capital, empty handed.

JPMorgan Chase said it was not acquiring any senior unsecured debt, subordinated debt, and preferred stock of WaMu's banks, or any assets or liabilities of the holding company. JPMorgan also said it will not take on the lawsuits facing the holding company.

JPMorgan Chase's acquisition of Washington Mutual follows its purchase earlier this year of Bear Stearns Cos. JPMorgan Chase is now the second-largest bank in the United States after Bank of America Corp., which recently bought Merrill Lynch in a nationwide financial shakeup that included Lehman Brothers going bankrupt and American International Group Inc., the world's largest insurer, getting taken over by the government.

JPMorgan Chase said the acquisition of WaMu will give it 5,400 branches in 23 states, and that it plans to close less than 10 percent of the two companies' branches.