Monorail Bankruptcy Marches On

Ambac Assurance Corp. will appeal a Nevada bankruptcy judge’s ruling that the Las Vegas Monorail Co. was entitled to file for bankruptcy under Chapter 11.

The appeal was announced Monday in a disclosure bond trustee Wells Fargo filed Tuesday with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website.

The nonprofit operator of the monorail filed for Chapter 11 bankruptcy in January, in the face of ridership and revenue numbers that leave it nowhere near able to pay its debt service.

The four-mile-long monorail line was financed with a $649 million tax-exempt bond issue in 2000, of which $451 million was senior-tier debt insured by Ambac. The Nevada Department of Business and Industry was the conduit issuer.

Ambac had moved to dismiss the Chapter 11 proceeding, arguing that the monorail company was really a municipality.

The monorail company argued that it was a not-for-profit corporation, and the bankruptcy judge agreed.

Ambac this week filed a notice of its intent to appeal and filed a motion seeking to stay the Chapter 11 proceedings until its appeal is complete.

Ambac has troubles of its own — in March the Wisconsin insurance regulator created a segregated account for the insurer’s most troubled policies. The $35 billion segregated account primarily consists of toxic mortgage securities, but the Las Vegas Monorail bonds are in there as well. They are the only municipal bonds in the segregated account.

Wells Fargo, the trustee, has gone to court to challenge the placement of the bonds into the account.

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Transportation industry Bankruptcy
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