Ad Hoc Committees Owe Fiduciary Duties? WaMu Threatens to Turn a Molehill Into a Mountain


Much has already been written about the "insider trading" aspects of Judge Walrath's September 13 Opinion denying confirmation of WaMu's Chapter 11 plan of reorganization (the Opinion can be found here). In a nutshell, Judge Walrath expressed the view that a person in possession of MNPI (material non-public information) could be considered to be engaged in insider trading even after the MNPI restriction period ends.

While that part of the Opinion is certainly a blockbuster, we are focusing here on a different aspect of the Opinion, namely Judge Walrath's view that members of an ad hoc committee can be considered to owe fiduciary duties to other creditors holding the same class of securities. Yikes! The first time she said this, we noted her comments in "The WaMu Double Whammy," which can be found here. We repeat now what we said then, which is that this is a frightening conclusion. Except then, Judge Walrath's comments were more speculative. In her latest Opinion, although still dicta, all speculation is laid to rest.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bracewell & Giuliani LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.