Washington Mutual Inc. sues JPMorgan for return of $4 billion

The legal tangle surrounding the bankrupt holding company for Washington Mutual got even more snarled this week, as the company sued JPMorgan Chase for the return of some $4 billion in deposits.

The money, claimed by Washington Mutual Inc. (WMI) and its investment-company affiliate, resides in several accounts the bankrupt company maintained at its two subsidiary banks.

Last September, federal regulators seized the banking subsidiaries and sold them to JPMorgan Chase for $1.9 billion. A day later, the holding company and the investment company — which were left out of the JPMorgan sale — filed for Chapter 11 bankruptcy protection in Delaware.

Since then, they have been trying to gain access to the accounts, which WMI used to pay taxes, dividends, debt payments and other operating expenses.

JPMorgan has declined to turn over the money, saying it may have a claim on the funds that would have to be litigated through the bankruptcy court.

JPMorgan spokeswoman Christine Holevas declined to comment on the suit.

Filed Monday, the suit is the latest legal scuffle over the corporate husk that once housed the nation's largest thrift.

Last month, WMI sued the Federal Deposit Insurance Corp., alleging the agency improperly denied potentially billions of dollars in claims against the holding company's former banking unit. The suit also claims the FDIC improperly sold the bank subsidiaries to JPMorgan Chase for less than they could have fetched in a "straight liquidation."

For its part, the FDIC has said in court papers it may have a claim on the $4 billion in deposits.

And bondholders for Washington Mutual Bank, the larger of the two former bank subsidiaries, have claimed that turning over the cash to WMI would be unfair without forcing it to prove ownership.

In a separate matter, last week five former WaMu executives sued the FDIC, saying that under their written employment agreements they were owed "change in control" payments, equal to one-and-a-half times their regular pay, after the thrift was seized and its banking assets sold off.

The suit seeks class-action status for more than 100 other former WaMu executives similarly affected.

Information from Bloomberg News is included in this report.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com