NEW YORK (AP) -- Ambac Financial Group Inc. has filed a reorganization plan with the U.S. Bankruptcy Court for the Southern District of New York. The holding company for failed bond insurer Ambac Assurance Corp. did not detail the terms under which it would exit bankruptcy court protection when it filed the plan late Wednesday. The company sought Chapter 11 bankruptcy protection in November, after two years of trying to stave off collapse brought on by the crumbling housing market. Once the second-largest bond insurer in the U.S., Ambac Assurance Corp., its main operating subsidiary, was taken over by Wisconsin regulators in March 2010. The Wisconsin insurance commissioner acted because of fears the company would run out of money paying claims on policies backing risky structured finance transactions -- the credit default swaps, residential mortgage-backed securities and other complicated securities deals that helped fuel the financial crisis in 2008. Ambac Financial is based in New York, but Ambac Assurance, is based in Wisconsin, which makes it subject to that state's regulators. Bond insurers were once considered among the most stable companies, because they backed mostly government agencies selling debt to pay for municipal projects like road construction and school building -- creditors that rarely default. That changed in the late 1990s, when the companies started guaranteeing financial instruments backed by risky home and commercial loans. When the housing market began deteriorating, it soon became clear that companies like Ambac had provided coverage for more than they could handle. Ambac spent the better part of two years trying to raise enough capital to cover its obligations before finally seeking bankruptcy protection. In its initial filing, it listed $1.62 billion in debt and $394.5 million in assets. The reorganization plan would give new stock and warrants, or the right to buy stock at a specific price, to various unsecured creditors and holders of $1.25 billion in senior debt. Holders of $444.2 million in subordinated debt would receive 1.5 percent of the new stock, plus warrants. The plan still needs agreement from the Wisconsin insurance commissioner and Ambac Assurance. http://finance.yahoo.com/news/...s-bankruptcy-apf-1938892969.html?x=0 |
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