BREAKING NEWS
Bond insurer Ambac files for bankruptcy
Published on Tue, Nov 09, 2010 at 08:37
Ambac Financial Group Inc, which was the second-largest US bond insurer before suffering huge losses on risky mortgages, filed for bankruptcy on Monday, according to court documents.
The company said in a filing with Manhattan's bankruptcy court that it had liabilities of USD 1.68 billion.
Bond insurer Ambac files for bankruptcy
Ambac faltered after it began chasing higher profits by expanding beyond municipal bond insurance and insuring riskier debt. That move backfired as the housing market crashed and credit markets tightened.
Ambac said it was unable to raise needed capital and failed to reach an agreement with senior bondholders that would have allowed it to restructure through a pre-packaged bankruptcy.
Under such a Chapter 11 filing, the bankrupt company enters court protection with the support of most creditors which allows for a speedy restructuring.
Ambac said it has agreed to a non-binding term sheet that will serve as the basis for further talks with bondholders.
"That may allow the company to emerge from bankruptcy more expeditiously," Ambac said in a statement.
The company also said it is planning to ask the bankruptcy court to restrict transfers of the company's stock and claims against the company, a move that will allow it to preserve a tax benefit worth about USD 7 billion.
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