Washington Mutual and JPMorgan are trading barbs in bankruptcy court over $4 billion.
Reuters: Washington Mutual Inc told a federal judge on Thursday that JPMorgan should be forced to return more than $4 billion to the bankrupt holding company, whose bank was seized by regulators and sold to JPMorgan.
Washington Mutual Inc attorneys argued in a bankruptcy court that records and depositions show the disputed money was on deposit at the holding company’s banks when they were seized last year in the biggest bank failure in U.S. history.
Attorneys for JPMorgan & Chase Co and federal regulators described Washington Mutual Inc’s bookkeeping as a “shell game” that would require more evidence to determine if the money was a deposit or some other form of transaction, such as a capital contribution.
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Last September the FDIC seized Washington Mutual’s banking operations and sold them to JPMorgan for $1.9 billion. The WaMu holding company filed for bankruptcy shortly thereafter.
Two heavyweight attorneys argued for their respective sides, providing somewhat dramatic quotes for a hearing on disputed bank deposits.
Arguing for Washington Mutual, Quinn Emanuel’s David Eisberg told the court, “Not a single witness, not a single witness says the most obvious and fundamental thing, that the funds belong to JPMorgan.”
But, representing JPMorgan, Sulllivan & Cromwell’s Robert Sacks questioned why a nearly $4 billion deposit was moved between two of the holding company’s banks, Reuters reports. “Why did they move that money. How do we know it was not a capital contribution? We haven’t been able to talk to the people who moved that money,” Sacks said.
Washington Mutual was requesting summary judgment; the judge’s decision is pending.
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