(Updates with financial adviser in first paragraph.)
Oct. 24 (Bloomberg) -- Ambac Financial Group Inc. asked for more time to control its reorganization in bankruptcy, as a financial adviser said the company has enough money to meet its obligations for at least five years.
Ambac, the holding company for a failed bond insurer, has requested until Feb. 3 to control its Chapter 11 case in New York. The company had $52.8 million in available resources as of Oct. 14, according to C.J. Brown, a managing director of Blackstone Advisory Partners L.P. who filed a statement today in support of the extension.
“The company’s liquidity position is expected to remain sufficient for at least the next five years,” Brown said.
Ambac already has a plan to exit bankruptcy that resolves how it will share a tax benefit with its operating unit, Ambac Assurance Corp., which is being overseen by Wisconsin regulators. Creditors are voting on that plan, which is scheduled to go before a judge Dec. 8 for final confirmation.
The company’s spending rate until it exits bankruptcy is about $2.5 million to $4.5 million a month, Brown said. Ambac Financial expects future cash inflows from its operating unit worth $5 million per year, and Ambac Assurance will contribute at least 85 percent of the costs of a dispute with the IRS and give it a cash grant worth $30 million, Brown added.
To complete its Chapter 11 case, Ambac needs to end a dispute with the Internal Revenue Service over the way it accounts for losses on credit-default swaps. Those losses, or “net operating losses” are valued at $7 billion, according to Ambac. The company seeks to use $4.7 billion of the losses for future tax years, Ambac said in yesterday’s filing.
The holding company case is In re Ambac Financial Group Inc., 10-15973, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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