Judge rejects Wamu reorganization plan

DOVER, Del. — A Delaware judge has refused for the second time to approve a plan from bank holding company Washington Mutual Inc. for its reorganization.

In a 139-page ruling late Tuesday, the judge said it’s possible that hedge funds supporting the plan engaged in insider trading of WMI securities during the bankruptcy as opponents of the plan claim.

The reorganization plan is based on settling lawsuits that pitted Washington Mutual, the Federal Deposit Insurance Corp. and JPMorgan Chase against one another after the FDIC seized WaMu’s Seattle-based flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion in the largest bank failure in U.S. history.

The judge previously said certain revisions to the plan were needed before it could be approved.