Conflicts Of Interest In WMI’s Case?

by Kyle on July 11, 2020

A recent letter surfaced in the Washington Mutual Bankruptcy proceeding that accuses the Debtors attorney, “Weil, Gotshal & Manges LLP”, of having a conflict of interest in this case. Quoting, page 13 of this link. The whole letter is on page 12 & 13;

* Prior entering into the “global settlement,” the Debtors were a party to other significant litigation against, among others, JPMC and the FDIC (the agency responsible for seizing and selling       Washington Mutual Bank). In such other litigation, the Debtors made numerous claims of value purportedly owned by, or owed to, the Debtors, which claims, if successful, could have resulted in significant distribution to creditors in these cases, including members of Class 19. But, prior to entering into the “global settlement” to compromise substantially all of those claims (including claims as to the ownership of the Trust Preferred Securities), the Debtors had conducted, in the view of the TPS Consortium, minimal (and in some cases, perhaps, no) discovery or analysis of such claims. Moreover, it appears the Debtors’ attorneys responsible for negotiating the “global settlement” had potentially disabling conflicts of interest with certain parties who, under the settlement, would receive significant additional benefits, including, without limitation, JPMC.

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July 11, 2020 at 9:50 pm

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