Mono-Line Municipal Bond Insurer AMBAC to Declare Bankruptcy

Ambac Financial Group, a holding company for Ambac Assurance Co, itself an insurer of American municipal debt in the form of bonds, has petitioned for chapter 11 bankruptcy relief. This has occurred as a result of Ambac being unable to service its debt obligations, reported as $ 1.6 billion.

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NOV 8, 2010 6:37pm ET
Patrick McGee @ The Bond Buyer
Ambac Financial Group Files Chapter 11 Petition


Ambac Financial Group announced late Monday it filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.

The company, which held $1.6 billion of debt as of June 30, said it will “continue to operate in the ordinary course of business as 'debtor-in-possession’ under the jurisdiction of the Bankruptcy Court.”

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Shares of the insurance holding company sunk by more than one-third in after-hours trading to $0.34. In normal hours, the company’s stock rose 3.75% to $0.52. The company’s stock, which peaked at $96.08 on May 18, 2007, fell below $1 for the first time in February 2009.

Ambac announced on Nov. 1 that it would skip paying a $5.9 million interest payment owed on its debt that day. The company said it was unable to raise fresh capital and would be forced to file for bankruptcy under Chapter 11 unless an agreement could be reached with its creditors on a prepackaged bankruptcy.

Those talks failed, according to a press release Monday.

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November 1, 2010, 3:47 PM EST
Colin Barr @ fortune.com
Ambac sees bankruptcy ahead

 Bond insurer Ambac failed to make a scheduled $2.8 million interest payment on some debt and warned that it expects to be in bankruptcy by year-end, one way or another.

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New York-based Ambac said it decided not to make a scheduled payment on $75 million of 7.5% debentures due 2023. If the firm doesn’t make the payment within 30 days, it could be in default on the notes and could face acceleration of that debt’s maturity.

Bankruptcy talk is nothing new for Ambac, which warned around this time last year that it could run out of funds in 2011. The firm’s fate was further solidified in August, when Ambac said for the first time it was working on a prepackaged bankruptcy with creditors.

Ambac has $1.6 billion in outstanding debt and has been trying to restructure those obligations to reduce the drain on its cash position. The firm made a mint writing insurance for Wall Street on bonds and related derivatives, such as collateralized debt obligations, during the past decade.

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The company said one complicating factor is that while creditors will be expected to convert their debt claims to stock ownership in a reorganization, the timing of their debt purchases could knock the struts out from under the tax shelter the company has erected out of its massive postbubble losses.

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September 29, 2010 — 10:46 PM SAST
Karen Freifeld & David Mildenberg @ Bloomberg Business
Ambac Sues Bank of America Over Countrywide Bonds

Ambac Assurance Corp. sued Bank of America Corp. over $16.7 billion of mortgage-backed securities, saying the bank’s Countrywide Financial Corp. unit fraudulently induced Ambac to insure bonds backed by improperly made loans.

Ambac found that 97 percent of 6,533 loans it reviewed across 12 securitizations sponsored by Countrywide didn’t conform to the lender’s underwriting guidelines, according to the complaint filed yesterday in New York state Supreme Court. Many of the loans were made to borrowers with limited or no ability to meet their payment obligations, Ambac said.

The lawsuit follows negotiations between Bank of America, which acquired Countrywide in 2008, and Ambac over mounting losses caused by loans made during the early 2000s as U.S. housing prices soared. Ambac has paid $466 million in claims from more than 35,000 Countrywide home-equity loans that have defaulted or been charged off, according to the lawsuit.

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Nov. 10, 2009 10:24 PM ET
Edward Harrison @ http://seekingalpha.com/
Ambac: Now It Warns of Bankruptcy?

Bond insurer Ambac Financial (ABK) has warned bankruptcy is a distinct possibility, sending its shares plummeting more than 30% Tuesday.

What is intriguing about this pending bankruptcy is how this company escaped bankruptcy in 2008, was downgraded continually in 2009, yet just reported billions in profit 5 days ago. Now it warns of bankruptcy?

This story also is related to municipal bonds...

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Mon Nov 8, 2010 8:08pm EST
Tom Hals @ Reuters
UPDATE 5-Bond insurer Ambac files for bankruptcy

* Files for bankruptcy with $1.68 billion in liabilities

* Company had been in talks with bondholders

* Shares down 63 percent at 19.5 cents after hours (Adds bankruptcy details, background; updates share price)