Bank of America Corp. sold most of the $225.7 million worth of defaulted sewer bonds it held and dropped out of a court case related to the bankruptcy of Jefferson County, Alabama, according to court records.

The second-biggest U.S. bank said in a court filing last week that two of its units would no longer participate in the appeal of a bankruptcy court ruling that stripped bondholders of control over Jefferson County’s sewer system. One unit, Bank of American N.A., sold all of the $65.7 million in bonds it held. The other, Blue Ridge Investments LLC, sold most of the $160 million in bonds it held, according to court records filed with the U.S. Court of Appeal in Atlanta.

Because of the sale, Blue Ridge “no longer desires to pursue this appeal and incur the fees and expenses necessary to do so,” the company said Aug. 10 in court papers.

U.S. Bankruptcy Judge Thomas B. Bennett in Birmingham, Alabama ruled in January against bondholders when he found that the county’s bankruptcy stripped a receiver working for bondholders of control of the insolvent sewer system.

The decision by Bank of America leaves other bondholders and bond insurers, including Assured Guaranty Municipal Corp., to fight the ruling on their own. Bondholders are owed more than $3 billion related to sewer system improvements.

Bank of America didn’t say who bought the bonds or how much the buyer paid. A company lawyer, Joe A. Joseph, didn’t immediately return a call for comment.

The bankruptcy case is In re Jefferson County, 11-05736-9, U.S. Bankruptcy Court, Northern District of Alabama (Birmingham). The appeal is Assured Guaranty Municipal Corp. v. Jefferson County, Alabama, 12-13654, U.S. Court of Appeals for the Eleventh Circuit (Atlanta).

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