Washington Mutual Inc, the biggest bank failure in history, may have a second life after bankruptcy.That is almost unheard of — the majority of bankrupt financial companies liquidate — and is largely a result of the tax advantages of staying in business.
What's more, tax refunds that are due Washington Mutual—about $5.6 billion—are its biggest asset.
WaMu owes some of that $5.6 billion to the FDIC and some of it to JPMorgan, but the law that created the refund "specifically forbids companies that received bailout funds, which includes JPMorgan, from receiving such a payment." Negotiations concerning WaMu's reorganization, however, are still ongoing:
An FDIC spokesman said the regulator was working with all parties involved to reach agreement with respect to all terms of the proposed settlement."The plan, disclosure statement, and settlement agreement that were filed on Friday do not reflect the continuing discussions among the parties," the FDIC said in an e-mailed statement. [...]
Washington Mutual also said on Friday that the reorganization plan would see it distribute more than $7 billion to creditors.
The plan also calls for the reorganized company to undertake a rights offering, under which certain creditors will receive a right to buy newly issued shares of the reorganized company. The reorganized company will have interest in WMI Investment Corp and WM Mortgage Reinsurance Co, it said.
"I really think that aside from winding down assets, they may be thinking about using the shell and using the tax advantages to acquire other businesses," said [Kevin Starke, senior vice president of CRT Capital Group in Stamford, Connecticut], who cited banking businesses as a possible target.
Can I file for bankruptcy and get "tax advantages" for staying alive afterward? I mean, I have the same rights as a corporation, right? Thanks!
