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The judge in Washington Mutual's bankruptcy case ruled yesterday that a group of investors who are plaintiffs in a federal mortgage-backed securities lawsuit against WaMu cannot file a claim in the company's bankruptcy case until distributions are made to a group of low-ranking creditors, the Associated Press reported yesterday. The plaintiffs, whose lawsuit is scheduled for a September trial in Seattle, have asserted a claim of $435 million in the bankruptcy case and argue that they should be treated as general unsecured creditors. Washington Mutual maintains that the plaintiffs' claims must be subordinate to those of other creditor classes. WaMu also said that the plaintiffs had agreed in a previous stipulation not to file a claim unless a group of low-ranking creditors with securities fraud claims had received recoveries.

UBS AG, which had more than $57 billion of losses and writedowns after the U.S. real estate crash, is betting there is enough demand for toxic commercial property assets to sell debt created at the height of the boom, Bloomberg News reported today. The bank is seeking buyers this week for collateralized debt obligations assembled in 2007 with a face value of $1.5 billion that contain securities tied to skyscrapers, malls and hotel loans. UBS is trying to follow the Federal Reserve Bank of New York's record $7.5 billion sale of similar bonds last month acquired in the 2008 rescue of American International Group Inc.