Washington Mutual reaches tentative deal with shareholders that could resolve objections to bank holding company's reorganization plan

Cindy Allen

WILMINGTON, Delaware , May 24, 2011 (Associated Press) – Washington Mutual Inc. has reached a tentative agreement with shareholders that could resolve their long-standing objections to the bank holding company's proposed reorganization plan.

An attorney for WMI told a federal bankruptcy judge in Delaware on Tuesday that the agreement carves out $30 million from the bankruptcy estate to fund a litigation trust that shareholders and certain creditors could use to pursue legal claims against third parties.

The new agreement also calls for a noteholder group that includes four hedge funds supporting WMI's current reorganization plan to provide a $100 million credit facility that stockholders in the reorganized company could use to make acquisitions in order to take advantage of certain tax attributes.

If a final agreement is reached, it could be subject to a court hearing in late June.

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