http://www.marketwatch.com/story/washin ... =bigcharts
...Washington Mutual's Chapter 11 plan was rejected earlier this year and has since been revised. It still has foes other than shareholders, including holders of trust preferred securities, and plaintiffs in securities litigation.
Those opponents have already weighed in formally against the revised Chapter 11 plan, which was slated for hearing June 6. Only shareholders have yet to be heard from.
Lawyers for the official committee have been probing three hedge funds that own big stakes in Washington Mutual's debt, looking for evidence they bought and sold based on information gained at the Chapter 11 plan bargaining table
Judge Mary Walrath noted the suspicions when rejecting the original Washington Mutual Chapter 11 plan. Though based on hearsay evidence, the judge said, the contentions the big bankruptcy case was tainted were of concern.
Appaloosa Management L.P., Aurelius Capital Management LP and Owl Creek Asset Management all deny wrongdoing. All have been subjected to shareholder questioning in recent weeks, court documents say.
If they prove out, the claims of insider trading could sway hundreds of millions of dollars in Washington Mutual's case, which promises creditors payment in full at the contract rate of interest and ranks some of the hedge fund holdings as debt, rather than equity.
Shareholder attorneys have attacked the plan on both fronts, contending the lower federal judgment rate of interest is all that's required, and that one class of hedge fund "debt" is in fact equity, that should share the fate of other equity in the company.
Walrath indicated proof of insider trading could sway her rulings on those key points.
