MBIA Inc (MBI)

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MBIA in Court News
Elizabeth Amon
BloombergNews.com
Jan 24, 2011

Banks Appeal Dismissal of MBIA Restructuring Lawsuit

UBS AG, Bank of America Corp. and more than a dozen other banks asked New York’s highest court to reverse a lower court ruling that threw out their lawsuit against MBIA Inc. that challenged its restructuring.

MBIA won dismissal Jan. 11 of a lawsuit by banks including Citibank NA and Royal Bank of Scotland Plc that claimed the bond insurer’s split into two units was intended to defraud policyholders. MBIA climbed to its highest level since September 2008 on news of the dismissal by the state’s Appellate Division.

The banks said in their notice of appeal, filed Jan. 20 in state trial court, that they are challenging “each and every part of the order” by the Appellate Division.

The banks claimed the restructuring, approved by New York’s insurance department in 2009, transferred $5 billion in cash and securities out of MBIA’s primary operating unit, MBIA Insurance, to another entity now known as National Public Finance Guarantee Corp., according to the complaint.

The move meant MBIA Insurance Corp. wouldn’t be able meet future obligations to holders of financial-guarantee insurance policies, the banks said.

A five-judge appellate panel dismissed the suit in a 3-2 decision.

Marc Kasowitz, an attorney for MBIA, didn’t return a call seeking comment. On Jan. 11, he said he was confident the restructuring would be upheld. New York law gives decisions by state agencies such as the insurance department “great deference and great weight,” Kasowitz said in an interview on Bloomberg Television.

The case is ABN Amro Bank NV v. MBIA Inc., 601475-2009, New York State Supreme Court (Manhattan).

http://www.bloomberg.com/news/2011-01-24/jpmorgan-ubs-lehman-mbia-tcw-rbs-messier-in-court-news.html?cmpid=yhoo