Joshua Hochberg, a former top official in a U.S. Department of Justice criminal fraud unit, has been appointed to examine the bankruptcy of Washington Mutual Inc , the largest U.S. banking failure.
The appointment was announced six days after U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, directed that an examiner be named to review a recent settlement designed to help Washington Mutual reorganize, as well as related claims.
Hochberg is a partner at McKenna Long & Aldridge LLP in Washington, D.C. In a court filing he said that prior to joining the firm in 2005, he was chief of the fraud section, criminal section, of the Justice Department.
The appointment requires court approval, and was announced by the Office of the U.S. Trustee, which is part of the Justice Department.
Shareholders of Washington Mutual had long sought an examiner, believing they have been shortchanged in Washington Mutual's nearly 2-year-old bankruptcy.
Washington Mutual failed on September 25, 2008, when the Federal Deposit Insurance Corp seized its banking unit and sold it to JPMorgan Chase & Co for $1.9 billion. The holding company filed for bankruptcy protection the next day.
Earlier this year, Washington Mutual entered settlements of its main disputes with both the FDIC and JPMorgan.
Its proposed reorganization plan based on those settlements calls for creditors to recover as much as $6.8 billion.
Shareholders, who believe the company's assets are worth as much as $30 billion, would recover nothing.
In his filing, Hochberg also said that earlier Monday, before being named examiner, he sold the 300 JPMorgan shares he had owned.
U.S. bankruptcy law allows the appointment of an examiner when it is in the creditors' interest. An examiner has fewer powers than a court-appointed trustee.
The case is In re: Washington Mutual Inc et al, U.S. Bankruptcy Court, District of Delaware, No. 08-12229.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)