In re Washington Mutual, Inc.
United States Bankruptcy Court for the District of Delaware
461 B.R. 200 (2011)
- Written by Eric Miller, JD
Facts
Washington Mutual, Inc. (debtor) went into bankruptcy under Chapter 11 of the United States Bankruptcy Code. The equity committee alleged that Washington Mutual’s settlement noteholders had traded on insider information obtained in settlement negotiations for the purposes of profit and influencing the reorganization in their own interests. Therefore, the equity committee moved for equitable disallowance of the settlement noteholders’ claims (i.e., denial of the right to receive a distribution under the plan) in federal bankruptcy court. The settlement noteholders vigorously opposed the motion, arguing that equitable disallowance was not an available remedy under the Bankruptcy Code.
Rule of Law
Issue
Holding and Reasoning (Walrath, J.)
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