Chapter 11 Reorganization of Washington Mutual

Chapter 11 Reorganization of Washington Mutual

1) One of the major reasons that contributed to the eventual decine of Washington Mutual was its detoriating share prices. The share prices in 2008 were as low as around $ 2.00. This was a steep fall as as last year theire shares were traded around the price of $ 45. Despite the public announcements that were made by the management of Washington Mutual that it would stay independent, it was just the matter of time before they hired Goldman Sachs with the motive of identifying the potential bidders. During that time, Massive run was observed by the Bank As through wire transfer and internet, customers were withdrawing their deposits. In ten days, around $ 17 million of deposits were taken out of the bank. They were pressurized by Treasurey and FED to find a suitable buyer (Dwyer & Tkac, 2009). They were forced and pressurized to do so as is there was a takeover by FDIC, it would have brought a serious drought on the insurance funds of FDIC, as they were already hit by the eventual failure of IndyMac. Secret auction was being hold and on 25th of September, which was quite ironically 119th anniversary of Wamu, it was being informed that JP Morgan Chase was the ultimate winner of the bid.

2)The assets of Wamu were brought by JP Morgan on the lower price, the stockholders were nearly wiped out. The price of the stock dropped to $ 0.16 and in their subsequent Chapter 11 filing, they claimed that they had assets of $ 30 million and had a debt of around $ 8 million. At that time, it was one of the biggest bankcruptcy in USA and with the passage of time. But it can ...