Aurelius Now Opposes WaMu Deal It Helped Draft

Jun 24 2011 | 11:49am ET

Hedge fund Aurelius Capital Management has turned its back on a deal it helped devise to settle Washington Mutual’s reorganization.

Aurelius now says the deal unfairly benefits JPMorgan Chase & Co., which bought WaMu’s banking operations.

In a court filing on Wednesday, reports Reuters, Aurelieus argued the delay in implementing the deal has drained money from creditors and suggested JPMorgan contribute more to the settlement.

Aurelius, along with three other hedge funds— Appaloosa Management, Centerbridge Capital Partners and Owl Creek Asset Management—crafted the so-called "global settlement" last year to end legal battles between WaMu, JPMorgan and the Federal Deposit Insurance Corp. For their efforts in ending lawsuits, the four were to share about $10 billion of disputed assets.

Those disputed assets include $4 billion that was on deposit with WaMu’s former bank, which JPMorgan bought from the FDIC in 2008. WaMu filed for bankruptcy the day after the sale. Aurelius argues JPMorgan could have earned over $400 million on those deposits since the start of the bankruptcy, while paying only $20 million (0.2% annually) in interest.

"At this time, the Amended Global Settlement Agreement should not be approved as fair unless (JPMorgan) provides additional value to the debtors to compensate for the substantial delays," Aurelius said in a filing with Delaware's bankruptcy court.

Reuters says an attorney for WaMu expressed surprised at the filing, in light of the court’s approval of the global settlement.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.