Judge appoints mediator in WaMu bankruptcy

DOVER, Del. (AP) — A New Jersey bankruptcy judge will serve as mediator in the Chapter 11 bankruptcy case of bank holding company Washington Mutual Inc.

Delaware bankruptcy Judge Mary Walrath, who has twice rejected WaMu’s reorganization plans, appointed Raymond Lyons on Monday to mediate between the company and its creditors in the 3-year-old case.

The creditors include equity security holders who claim that hedge funds that supported Washington Mutual’s latest reorganization plan traded WMI debt with inside information obtained during the bankruptcy.

Walrath ordered WaMu to enter mediation before resuming its reorganization effort.

The hedge funds, supported by WaMu’s committee of unsecured creditors, had proposed former U.S. Attorney General Michael Mukasey as mediator, but the equity holders opposed him.

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