September 7, 2010 / 3:38 PM / 10 years ago

UPDATE 3-WaMu examiner gets more time to file report

* Examiner wants until Nov. 1 to file report

* Still needs significant number of documents

* Move further delays company’s exit from bankruptcy (Updates with judge approving examiner’s request; hearing details, share move)

By Tom Hals

WILMINGTON, Del., Sept 7 (Reuters) - The court-appointed examiner investigating the collapse of Washington Mutual Inc WAMUQ.PK was given several more weeks to complete his probe, a move that will again delay the company’s exit from bankruptcy.

Joshua Hochberg, who was appointed examiner in July, said he needed to extend the deadline for his final report to Nov. 1 from Oct. 8 as he required “a significant number of additional documents” from JPMorgan Chase & Co (JPM.N), government agencies and others.

The company filed for bankruptcy in September 2008, a day after regulators seized and sold its lending business in the biggest bank failure in U.S. history. JPMorgan then bought the bank for $1.9 billion.

Hochberg was appointed to determine Washington Mutual’s assets, including potential legal claims it might have if, for example, JPMorgan or the government were found at fault for causing the bank to fail.

Shareholders have said the total assets could be worth $30 billion, far more than the company’s estimate of less than $10 billion.

Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington approved the extension of the examiner’s deadline at a court hearing on Tuesday.

The extension forced the company to postpone, yet again, hoped-for approval of documents that would clear the way to send its reorganization plan to creditors for a vote. A company attorney also said a hearing to approve its plan would be rescheduled.

The Washington Mutual bankruptcy is one of the longest running bankruptcies of recent years. The company charted a course out of bankruptcy court based on settling potential claims against the Federal Deposit Insurance Corp, which was the receiver for the failed bank, and JPMorgan.

The three parties agreed to divide billions in cash, tax refunds and other disputed assets, with JPMorgan getting more back in tax refunds than it spent buying the bank. The agreement left Washington Mutual with about $7 billion to distribute, not enough for shareholders to get a recovery.

The examiner said in court documents he will file the report under seal with a redacted version for the public.

The company’s attorney, Brian Rosen of Weil, Gotshal & Manges, said Washington Mutual now hoped to ask the court to approve its disclosure statement, clearing the way for a creditor vote, at a Sept. 24 hearing.

Rosen said the company was targeting Dec. 1 to begin its confirmation hearing. It had been scheduled for Nov. 1.

Washington Mutual shares ended down about 11 percent in pink sheet trading at 19 cents per share.

The case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware, No. 08-12229. (Reporting by Tom Hals; editing by Martha Graybow and Andre Grenon)

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