Washington Mutual asks court to clarify warrant claim reserve amount

By Caroline Salls

Pittsburgh, Jan. 21 - Washington Mutual, Inc. is asking the U.S. Bankruptcy Court for the District of Delaware to reconsider a Jan. 14 order estimating the maximum amount of litigation tracking warrant (LTW) claims in connection with establishment of a plan reserve, according to a Jan. 21 court filing.

When it filed its original estimation motion in November, the company asked the court to set the maximum number of LTW claims at $250 million. However, the LTW claimants subsequently asked the court to set the claim amount at no less than $337 million.

Although the court set the claim amount at $337 million following a Jan. 6 hearing, Washington Mutual said the court also referred to the LTW claims reserve in two other opinions, each time in different amounts.

Specifically, the court said in its plan confirmation opinion that it had set the claim amount at $347 million at the Jan. 6 hearing, and, in a plan confirmation summary judgment opinion, the court said the reserve should be set at $334 million.

The company said the court later notified Washington Mutual that the court had always intended for the reserve to be set at $337 million, but it entered an estimation order on Jan. 14 that set the reserve at $347 million.

"Although a $10 million difference in the reserve may appear small given the size of these cases, such amount is still substantial to holders of already allowed claims and would reduce the amount available for distributions under the plan to other creditors," the company said in the motion.

As a result, Washington Mutual said it is asking the court to either file a revised order setting the reserve at $337 million, as indicated at the Jan. 6 hearing, or to clarify the basis for the $347 million reserve.

A hearing is scheduled for Feb. 8.

Washington Mutual, a Seattle-based savings and loan holding company, filed for Chapter 11 bankruptcy on Sept. 26, 2008. Its Chapter 11 case number is 08-12229.

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