WaMu Blasts JPMorgan 'Forum Shopping' Bid
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nicole...@gmail.com
Jul 11, 2009, 7:43:54 PM7/11/09
to Washington Mutual
From: Nicole - nicole...@gmail.com
By Christine Caulfield
Law360, New York (July 09, 2009) -- Washington Mutual Inc. has accused
JPMorgan Chase Bank NA of trying to derail WaMu's Chapter 11 case by
seeking to withdraw from the bankruptcy court two adversary
proceedings over a disputed $4 billion in assets.
Calling JPMorgan's motion an “untimely, transparent attempt at forum
shopping and delay,” WaMu argued Wednesday that the bank's attempt to
effectively remove the adversary cases back to the district court was
part of an overall delay strategy to unjustifiably withhold WaMu's
assets while frustrating the bankrupt financial giant's efforts to
make distributions to its creditors.
In a 52-page objection filed in the U.S. Bankruptcy Court for the
District of Delaware, the one-time savings and loan behemoth said the
same reasoning that led the court in June to deny JPMorgan's bid to
transfer the adversary cases to the district court applied with equal
force to the current motion.
The first adversary case at issue was launched by WaMu in the
bankruptcy court on April 27, and sought $4 billion in cash that was
held in the deposit accounts of subsidiary Washington Mutual Bank at
the time The bank was seized and sold by the Federal Deposit Insurance
Corp. to JPMorgan for $1.9 billion.
JPMorgan fired back with an adversary proceeding against WaMu seeking
declaratory judgments that it acquired the debtor in good faith and
that it was the owner of the $7.9 billion in disputed assets.
In its motion for withdrawal of the reference of the two cases from
the bankruptcy court, JPMorgan argued that the court was ill-suited to
consider the applicable federal banking laws governing the dispute.
But WaMu contended in its opposition that JPMorgan “invented this
meritless argument” only after deeming the bankruptcy court the
appropriate forum in which to file one of the two adversary cases
almost three months ago.
“JPMorgan admitted in its complaint that the bankruptcy court had
jurisdiction and that venue was proper, and never said a word about
there being a need to consider federal banking law,” WaMu said.
“To the extent the bankruptcy court, in adjudicating the adversary
proceedings, will be asked to give any consideration to federal
banking laws, that consideration will be, at most, tangential, and
certainly will not meet the 'meaningful consideration' standard
implemented by this district in assessing mandatory withdrawal of the
reference,” the objection said.
Further, WaMu argued, denying JPMorgan's motion would help to expedite
the bankruptcy process, with the debtor and its creditors “badly in
need of their cash deposits” to formulate a viable Chapter 11
restructuring plan.
The forum battle is being fought as the two sides wage war over WaMu's
bid to get its hands on JPMorgan's records for evidence supporting
allegations that the bank crafted a plot to undermine it prior to its
2008 collapse in order to buy up its banking assets cheaply.
Bankruptcy Judge Mary F. Walrath signed off on WaMu's motion to
examine JPMorgan's books on June 24, but JPMorgan filed a motion to
reconsider the order two days later.
WaMu sought production of documents and depositions connected to
potential business tort claims, potential fraudulent transfer claims,
potential turnover claims and potential preferential transfer claims
against JPMorgan.
The bankrupt trust also sought to conduct a Rule 2004 investigation
into JPMorgan after a group of WaMu investors sued JPMorgan in the
U.S. District Court for the Southern District of Texas alleging that
JPMorgan deliberately drove down the value of Washington Mutual Bank
by engaging in sham negotiations to glean confidential information it
then used to persuade bank customers to withdraw their deposits.
WaMu filed for Chapter 11 on Sept. 26, 2008, citing approximately $33
billion in total assets and $8.2 billion in debts.
WaMu is represented by Elliott Greenleaf and Quinn Emanuel Urquhart
Oliver & Hedges LLP.
JPMorgan is represented by Landis Rath & Cobb LLP and Sullivan &
Cromwell LLP.
The case is In re: Washington Mutual Inc., case number 08-12229, in
the U.S. Bankruptcy Court for the District of Delaware.
http://www.law360.com/search?zone_id=&searchField=Washington+Mutual&s...
By Christine Caulfield
Law360, New York (July 09, 2009) -- Washington Mutual Inc. has accused
JPMorgan Chase Bank NA of trying to derail WaMu's Chapter 11 case by
seeking to withdraw from the bankruptcy court two adversary
proceedings over a disputed $4 billion in assets.
Calling JPMorgan's motion an “untimely, transparent attempt at forum
shopping and delay,” WaMu argued Wednesday that the bank's attempt to
effectively remove the adversary cases back to the district court was
part of an overall delay strategy to unjustifiably withhold WaMu's
assets while frustrating the bankrupt financial giant's efforts to
make distributions to its creditors.
In a 52-page objection filed in the U.S. Bankruptcy Court for the
District of Delaware, the one-time savings and loan behemoth said the
same reasoning that led the court in June to deny JPMorgan's bid to
transfer the adversary cases to the district court applied with equal
force to the current motion.
The first adversary case at issue was launched by WaMu in the
bankruptcy court on April 27, and sought $4 billion in cash that was
held in the deposit accounts of subsidiary Washington Mutual Bank at
the time The bank was seized and sold by the Federal Deposit Insurance
Corp. to JPMorgan for $1.9 billion.
JPMorgan fired back with an adversary proceeding against WaMu seeking
declaratory judgments that it acquired the debtor in good faith and
that it was the owner of the $7.9 billion in disputed assets.
In its motion for withdrawal of the reference of the two cases from
the bankruptcy court, JPMorgan argued that the court was ill-suited to
consider the applicable federal banking laws governing the dispute.
But WaMu contended in its opposition that JPMorgan “invented this
meritless argument” only after deeming the bankruptcy court the
appropriate forum in which to file one of the two adversary cases
almost three months ago.
“JPMorgan admitted in its complaint that the bankruptcy court had
jurisdiction and that venue was proper, and never said a word about
there being a need to consider federal banking law,” WaMu said.
“To the extent the bankruptcy court, in adjudicating the adversary
proceedings, will be asked to give any consideration to federal
banking laws, that consideration will be, at most, tangential, and
certainly will not meet the 'meaningful consideration' standard
implemented by this district in assessing mandatory withdrawal of the
reference,” the objection said.
Further, WaMu argued, denying JPMorgan's motion would help to expedite
the bankruptcy process, with the debtor and its creditors “badly in
need of their cash deposits” to formulate a viable Chapter 11
restructuring plan.
The forum battle is being fought as the two sides wage war over WaMu's
bid to get its hands on JPMorgan's records for evidence supporting
allegations that the bank crafted a plot to undermine it prior to its
2008 collapse in order to buy up its banking assets cheaply.
Bankruptcy Judge Mary F. Walrath signed off on WaMu's motion to
examine JPMorgan's books on June 24, but JPMorgan filed a motion to
reconsider the order two days later.
WaMu sought production of documents and depositions connected to
potential business tort claims, potential fraudulent transfer claims,
potential turnover claims and potential preferential transfer claims
against JPMorgan.
The bankrupt trust also sought to conduct a Rule 2004 investigation
into JPMorgan after a group of WaMu investors sued JPMorgan in the
U.S. District Court for the Southern District of Texas alleging that
JPMorgan deliberately drove down the value of Washington Mutual Bank
by engaging in sham negotiations to glean confidential information it
then used to persuade bank customers to withdraw their deposits.
WaMu filed for Chapter 11 on Sept. 26, 2008, citing approximately $33
billion in total assets and $8.2 billion in debts.
WaMu is represented by Elliott Greenleaf and Quinn Emanuel Urquhart
Oliver & Hedges LLP.
JPMorgan is represented by Landis Rath & Cobb LLP and Sullivan &
Cromwell LLP.
The case is In re: Washington Mutual Inc., case number 08-12229, in
the U.S. Bankruptcy Court for the District of Delaware.
http://www.law360.com/search?zone_id=&searchField=Washington+Mutual&s...
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