NU Online News Service, March 15, 11:31 a.m. EDT
Troubled bond insurer Ambac Financial Group Inc. says a federal-bankruptcy judge granted approval late yesterday for its plan to reorganize the company.
The New York-based insurer says Judge Shelly C. Chapman sitting in the U.S. Bankruptcy Court for the Southern District of New York approved the plan yesterday. The company says the time table for implementation of the plan will be based on what is outlined in court documents.
“I am pleased that through the diligent efforts of all of those involved, and months of negotiations with various constituents, we have successfully secured plan confirmation,” says Diana Adams, Ambac’s president and chief executive officer. “While many challenges lie ahead, this is a key milestone in our work to reorganize Ambac Financial. The court’s decision positions us to focus on consummation of the plan and on our future.”
The company filed for bankruptcy protection in 2010 after suffering substantial losses from insuring structured financial instruments.
In that same year the Wisconsininsurance regulator placed subsidiary Ambac Assurance—holder of the structured-financial instruments that consisted of mortgage-backed securities—into rehabilitation, segregating it from Ambac Financial Group, Inc.
As for the company’s next step, Michael E. Fitzgerald, managing director, Investor Relations says in a statement, “We must now turn to satisfying the conditions precedent to the consummation of the plan, including reaching a final agreement on the terms of the IRS settlement and getting the necessary approvals. This may take some time to complete.”
Ambac has offered to pay the Internal Revenue Service $100 million and give up tax credits to settle a dispute over tax treatment of credit-default swaps.
Ambac also announced that it has come to a settlement with the city ofHercules,Calif.and its redevelopment agency over allegations that the city improperly diverted revenues pledged to bondholders from the redevelopment agency to the city.
Ambac says that under the settlement it will receive security in two city properties “with values estimated to be well in excess of the revenues diverted. The carrier will also be paid interest and legal costs.
Fitzgerald declined to discuss specifics of the litigation, but says, “We are pleased with the settlement and believe the court’s decision is supportive of our role and efforts in defending Ambac’s rights and the interests of bondholders in such circumstances.”