WASHINGTON, May 21 (Reuters) - Washington Mutual Inc WAMUQ.PK and the Federal Deposit Insurance Corp have reached a global settlement, a critical step in the bankruptcy involving the biggest bank failure in U.S. history.
The FDIC said on Friday the agreement settles claims between the bankrupt bank’s holding company and JPMorgan Chase (JPM.N), which acquired the failed bank.
The FDIC is involved because it was appointed receiver of Washington Mutual in September 2008, during the height of the financial crisis.
“This agreement will result in substantial recoveries to the receiver and resolve potential claims that could have taken years and millions of dollars to litigate,” FDIC General Counsel Michael Bradfield said in a statement.
The settlement is subject to the approval of the U.S. Bankruptcy Court for the District of Delaware.
The settlement could clear the way for Washington Mutual to reorganize as a mortgage insurer and investment company with valuable tax breaks.
The company plans to sell shares to fund its exit from bankruptcy and reorganization. (Reporting by Karey Wutkowski)