WaMu stockholders file suit to compel annual meeting

Two stockholders of Washington Mutual Inc. have filed suit to compel the bankrupt company to hold a shareholders meeting and elect a board of directors.

A Delaware bankruptcy court judge last week cleared the way for the lawsuit, ruling that bankruptcy law doesn't prevent the state suit from being filed. The case was filed Monday in Thurston County Superior Court on behalf of Texas resident Michael Willingham, who owns more than 1 million shares of WaMu common stock, and a New Jersey hedge fund called Esopus Creek Value, which owns 100,000 common shares and 15,000 preferred shares.

The two shareholders are also members of the equity holders committee that has gained official status in the bankruptcy case. That group on Monday asked the bankruptcy court to appoint an examiner to conduct an inquiry into the company's seizure and sale.

The lawsuit was filed in Thurston County because WaMu's registered office is in Olympia.

WaMu hasn't held a shareholder meeting since April 20, 2008, five months before its banking operations were seized by regulators and sold to JPMorgan Chase for $1.9 billion.

The shareholders stand to collect nothing in the bankruptcy under the liquidation plan proposed by Washington Mutual Inc. Their stated aim is to elect a board of directors that would pursue rather than settle litigation against the Federal Deposit Insurance Corp. and JPMorgan.

Bankruptcy law, however, puts the needs of creditors ahead of stockholders, so it's unclear how much latitude a new board of directors would have to fight lengthy lawsuits.