Bondholder lawsuit over WaMu seizure revived

Reuters

NEW YORK (Reuters) - A U.S. appeals court on Friday revived a lawsuit by bondholders of the failed Washington Mutual Bank who are challenging the thrift's seizure by the FDIC and sale to JPMorgan Chase & Co .

The D.C. Circuit Court of Appeals said a lower court erred in dismissing the case on the grounds that the bondholders had first failed to exhaust their administrative remedies before suing.

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The FDIC seized WaMu on September 25, 2008, and JPMorgan bought the thrift's banking assets for $1.9 billion. The bondholders complained that this price drastically undervalued WaMu's assets. WaMu's holding company, Washington Mutual Inc , filed for bankruptcy protection the next day.

(Reporting by Jonathan Stempel; Editing by Derek Caney)