Washington Mutual on Monday won court approval to move to the next stage in its renewed attempt to exit bankruptcy but was told to spell out what effect suspicions of insider trading could have on the $7 billion distribution plan.

Judge Mary Walrath said the company, the former parent of Washington Mutual Bank, or WaMu, can send out its revised plan to creditors for a vote after supplementing it with an analysis of what could happen if there is proof of insider trading.

Estimates are that $700 million or more worth of value could swing to lower-ranking creditors if shareholders dig up enough evidence that big investors profited from inside knowledge gained at the Chapter 11 plan bargaining table.

The suspicions are focused on four hedge funds that sat at the bargaining table when Washington Mutual hammered out its Chapter 11 distribution scheme: Appaloosa Management LP, Aurelius Capital Management LP, Centerbridge Partners LP and Owl Creek Asset Management LP.

All deny breaching rules that ban trading based on confidential information and say the suspicions are unfounded. The official committee of equity security holders is investigating the allegations to see whether there is sufficient evidence to make a case at confirmation hearings in May.

“We don’t know if anyone did anything inappropriately or not,” Washington Mutual attorney Brian Rosen of Weil, Gotshal & Manges said at a hearing in the U.S. Bankruptcy Court in Wilmington, Del.

Washington Mutual agreed to add information that spells out the financial effect of a potential finding that some or all of the hedge funds profited based on confidential Chapter 11 data to materials that creditors will review before deciding how to vote on the plan. The company has set a May 2 date to seek confirmation of its revamped plan.

In rejecting Washington Mutual’s original Chapter 11 plan, Walrath said the insider-trading allegations, if proven, could warrant a reduction in the interest rate some creditors expect to receive. Washington Mutual has agreed to give senior creditors their contract rate of interest, rather than the minimum required federal judgment rate of interest.

If the shareholders turn up proof of insider trading and the interest rate picture changes, Aurelius likely will switch its vote to a “no” on Washington Mutual’s Chapter 11 plan, said Thomas Moers Mayer, an attorney for the hedge fund with Kramer Levin Naftalis & Frankel.

Monday’s ruling moves Washington Mutual a step closer to ending its stay in bankruptcy, which began in September 2008 when regulators seized it. The mortgage-stuffed thrift was teetering on the brink of collapse, regulators said, and had to be put into safer hands immediately.

J.P. Morgan Chase & Co. bought WaMu and, along with the Federal Deposit Insurance Corp., got caught up in a storm of legal trouble over WaMu’s collapse. Washington Mutual, J.P. Morgan and the FDIC agreed to a settlement that forms the core of the Chapter 11 plan.

Recent changes cut the amount of cash that will be paid out immediately if the plan is approved because the company decided to reserve funds for ongoing tax fights. Washington Mutual says it expects to win those fights and pay off much of its debt, with interest. Shareholders are slated to get nothing under Washington Mutual’s Chapter 11 plan.