NU Online News Service, May 4, 3:05 p.m. EDT
A group of banks contesting the split of bond-insurer MBIA into two companies won a round in court against the New York State Insurance Department over the release of e-mails related to the plan.
A state appeals court has ordered the insurance department to release to a judicial hearing officer all e-mails that were transmitted between then-Insurance Superintendent Eric Dinallo and several department employees relating to MBIA.
In a statement, an attorney for the banks seeking the document release—Robert J. Giuffra Jr., who is a partner at Sullivan & Cromwell LLP—says: “We’re pleased that the Appellate Division has denied the insurance department’s efforts to prevent discovery of e-mails among senior department personnel reflecting bias, prejudgment of specific facts, or that the superintendent’s approval was preordained or steered to an approval.”
The banks contend the split of Armonk, N.Y.-based MBIA would be detrimental to the payment of coverage for structured finance obligations that the company insures.
MBIA was split into two companies in 2009. MBIA placed its healthy municipal-bond insurance business in one company named National Public Finance Guarantee Corp., while the second company, MBIA, retains the structured finance obligation exposures.
The banks have filed an Article 78 action against the department seeking to nullify Dinallo’s order approving the split.
The department declined to comment on the court’s decision.