Washington Mutual Inc said on Tuesday that shareholders were demanding an independent investigation of the company's collapse in the hopes of getting a pay off, according to court documents.
Shareholders last week asked the bankruptcy court overseeing Washington Mutual's Chapter 11 case to appoint an examiner to investigate the failure of the company's lending business and the value of legal claims stemming from it.
Their request was accompanied by documents released by a congressional panel that held hearings about the collapse of Washington Mutual's lending business, which was the biggest bank failure in U.S. history.
The company called the examiner request a desperate attempt by the equity committee to throw any and every allegation against the wall in the hope that something will stick, according to its filing on Tuesday.
JPMorgan Chase & Co, which bought Washington Mutual's failed lending operations from the Federal Deposit Insurance Corp after they were seized, said everything surrounding the bank collapse had already been parsed.
Any investigation by an examiner would be wholly duplicative of the work done by the debtors, the official committee of unsecured creditors and other parties of interest over the past 19 months, said a filing by JPMorgan.
Washington Mutual Bank was seized and sold to JPMorgan for $1.9 billion in September 2008, at the height of the financial panic.
The company proposed a reorganization plan earlier this year that leaves nothing for shareholders and distributes around $7 billion to creditors.
Shareholders have estimated the company may have assets worth up to $20 billion when factoring in potential legal claims.
However, the company has proposed completely releasing JPMorgan and the FDIC from any claims.
Shareholders' request for an examiner was supported by the U.S. Trustee, a government official who oversees bankruptcy cases, who said the process would be served by an impartial review of the claims.
A hearing on the matter is scheduled for Wednesday at 10:30 a.m. EDT.
Shares of Washington Mutual closed down 1.8 percent at 16.3 cents in pink sheet trading on Tuesday.
The case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware (Wilmington), No. 08-12229.
(Reporting by Tom Hals, editing by Matthew Lewis)