A federal court approved bond insurer Ambac Financial Group Inc.’s bankruptcy plan Wednesday.

The approval by the United States Bankruptcy Court for the Southern District of New York specifies that certain conditions must be met before the plan goes into effect. Chief among these is finalizing a settlement with the Internal Revenue Service, said Ambac spokesman Michael Fitzgerald.

In February, Ambac offered the IRS $102 million to settle the agency’s $800 million claim against it. Ambac is waiting to see if IRS officials approve the offer. Approval may come in a month or in several months, Fitzgerald said.

In the plan, common shareholders would get no money and their shares would be extinguished, he said. The various classes of creditors, such as senior, junior, and unsecured, would get no money but would get shares in the new company.

If the IRS does not agree to the settlement, than Ambac will have to formulate a new bankruptcy plan and go back to court.

Ambac’s principal operating subsidiary, Ambac Assurance Corp., continues to insure public finance and structured finance, though it is not issuing new insurance. The corporation will continue to fulfill its insurance obligations, Fitzgerald said.

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