Insider-Trading Hearing Drags On In WaMu Case

Jul 18 2011 | 8:35am ET

The battle over the future of Washington Mutual—and over allegations that four hedge funds illegally traded in the former bank’s debt—will continue well into this week.

U.S. Bankruptcy Judge Mary Walrath adjourned court early on Friday to allow Aurelius Capital Management’s top lawyer to attend court on Monday. The hearing on finalizing WaMu’s bankruptcy exit plan, originally scheduled to take just three days last week, could now extend until Thursday as both sides struggle to fit their witnesses in.

Aurelius and the three other hedge funds—Appaloosa Management, Centerbridge Capital Partners and Owl Creek Asset Management—helped craft WaMu’s Chapter 11 bankruptcy plan but refused to renew that support earlier this year. Some shareholders allege that the hedge funds used confidential information that they learned during the creation of the company’s reorganization plan.

A settlement of those allegations fell apart last month.

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