Bloomberg News

Ambac May File New Plan or Move to Liquidate, Lawyer Says

September 21, 2011

(Updates with lawyer’s comment in third paragraph.)

Sept. 21 (Bloomberg) -- Ambac Financial Group Inc., the bankrupt holding company for a failed insurer, may file a new reorganization plan as soon as tonight or move to liquidate, depending on a Wisconsin regulator’s decision, a lawyer for the company said.

Wisconsin’s Office of the Commissioner of Insurance will decide at a meeting today whether to accept the holding company’s proposed treatment of its operating unit, Ambac Assurance Corp., under a reorganization plan filed in July, lawyer Peter Ivanick said in Manhattan court today. Ambac submitted the plan without an agreement from OCI, which regulates the operating unit.

“Our discussions with OCI have been very frustrating -- they’ve been emotional and quite often angry,” Ivanick told U.S. Bankruptcy Judge Shelley Chapman. If OCI rejects the proposed plan, Ambac will discuss with creditors whether to sue the agency or convert its Chapter 11 reorganization to a Chapter 7 liquidation, Ivanick said.

Ambac Assurance was the second-largest bond insurer before the 2008 financial crisis, when mounting defaults on mortgages swamped the company with claims. It guaranteed about $256 billion of $1.4 trillion in insured municipal debt, according to Bloomberg data.

Ambac Financial, based in New York, listed liabilities of $1.68 billion in its petition.

The holding company case is In re Ambac Financial Group Inc., 10-15973, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: Stephen Farr, Andrew Dunn

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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