Deadline passes for approval of WaMu deal

Washington Mutual Inc., former parent of the biggest U.S. bank to fail, missed the deadline for approval of its bankruptcy plan, making a related, $10 billion settlement subject to cancellation, a company lawyer said.

The missed deadline means the parties involved in the settlement, JPMorgan Chase and the Federal Deposit Insurance Corp., have the option to cancel the agreement, said Brian Rosen, a WaMu attorney.

The settlement, which splits billions of dollars worth of tax refunds and cash, is the central feature of WaMu's bankruptcy-exit plan, and JPMorgan and the FDIC are unlikely to pull out of the deal, Rosen said.

WaMu, based in Seattle, also missed a self-imposed Jan. 31 deadline to file a new version of its exit plan after U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Del., rejected the first version.

"We are trying to work out some nuances in the plan," Rosen said Tuesday.

He declined to say when the new plan might be filed.

WaMu is seeking to rewrite its bankruptcy plan to comply with a list of complaints Walrath raised in her December ruling.

The judge approved the settlement.

Christine Holevas, a JPMorgan spokeswoman, and Thomas Califano, a lawyer for the FDIC, declined to comment Tuesday.

WaMu filed for bankruptcy Sept. 26, 2008, the day after its banking operations were taken over by regulators and sold to New York-based JPMorgan for $1.9 billion.

At the time, Washington Mutual Bank had more than 2,200 branches and $188 billion in deposits.