Financial holding company JPMorgan Chase & Co. (JPM) has filed a countersuit against the Federal Deposit Insurance Corp. or FDIC and the holding company of Washington Mutual Inc. (WAMUQ.PK) to protect its purchase of the bank's assets, reports said.
The lawsuit filed Tuesday with the U.S. bankruptcy court in Delaware reportedly urged the court not to interfere with its purchase of WaMu's banking operations.
On March 20, WaMu filed a lawsuit against the FDIC for over $13 billion in connection with the purchase, arguing that the bank was worth more than the $1.9 billion JPMorgan paid for it. The deal was arranged by FDIC in September 2008.
On September 25, 2008, the US Office of Thrift Supervision placed WaMu's banking operations under the receivership of the FDIC, which sold the banking subsidiaries, excluding unsecured debt or equity claims, to JPMorgan & Chase for $1.9 billion. Following the sale, Washington Mutual, left with $33 billion assets and $8 billion debt, filed for Chapter 11 voluntary bankruptcy.
In its complaint, the holding company alleged that the liabilities assumed were worth more than their sale price, if FDIC had conducted a straight liquidation of the assets and liabilities. WaMu also said in the lawsuit that FDIC breached its statutory duty to maximize the net present value of its banking division's assets, thus disallowing its creditors and claimants to recover what they could in a straight liquidation.
JPMorgan reportedly said in its lawsuit that it sued to protect its interests in WaMu's banking operations. The company also wants to be reimbursed for the claims it might face over the purchase.
According to reports, at the center of JP Morgan's case is $4 billion in trust securities, taxing rights and $234 million in tax refunds, among others. JPMorgan has reportedly asked the court in the lawsuit to confirm its full legal title to the assets at issue and resolve all of the conflicting claims.
JPM is currently trading at $28.10, up $1.70 or 6.44%, on 13.59 million shares. For the past year, the stock traded in the range of $14.96-$50.63.
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