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Walrath also will wait until the confirmation hearing later this month to decide whether to approve a settlement under which Tranquility would drop a $49 million claim against WMI in return for a general unsecured claim of $9 million and up to an additional $1 million if money remains after payments to other creditors. Washington Mutual's latest reorganization plan, like two failed predecessors, is based on WMI, JPMorgan Chase and the Federal Deposit Insurance Corp. settling lawsuits they filed against one another after the collapse of Seattle-based Washington Mutual Bank in 2008 and the sale of its assets to JPMorgan Chase & Co. for $1.9 billion. It was the largest bank failure in U.S. history. Walrath has twice rejected reorganization plans filed by WMI, including in September, when she said WaMu's equity security holders had argued credibly that hedge funds supporting an earlier plan had engaged in insider trading of the company's securities based on information they obtained during the bankruptcy. The hedge funds denied the allegations. Washington Mutual announced in December that it was submitting a new plan to distribute about $7 billion to creditors after reaching a settlement with major creditors, including those who had made the insider trading allegations against the hedge funds.
[Associated
Press;
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