A Wisconsin appellate court Thursday affirmed the validity of Ambac Assurance Corp.’s segregated policy account, the bond insurer said in a statement.
“After giving full consideration to the objections, contentions, and arguments and after a careful examination of the record before us and of the circuit court’s findings and conclusions of law, we conclude that the circuit court properly exercised its discretion in confirming the rehabilitation plan at issue in this case, the appeals court said, upholding a previous decision by judge William Johnston.
The segregated account, set up in March 2010 to contain an original $50 billion in net par of exposure of around 700 poorly performing assets, did not pay claims for over two years until a 2012 court order. Ambac, which went into Chapter 11 in November 2010, also included defaulted municipal debt issued for the Las Vegas monorail shuttle service into that account, whose bondholders contested their placement through an appeal.
“The LVM bondholders and RMBS Policyholders do not provide any basis to conclude that the commissioner abused its discretion in entering into a settlement that the court found protects the interests of policyholders, creditors, and the public by avoiding the massive losses that would have resulted had the commissioner not agreed to a settlement, the appeals court said.
Ambac emerged from bankruptcy on May 1.
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Corrected October 28, 2013 at 5:13PM: Correction: An earlier version of this story incorrectly attributed quoted comments to the circuit court judge. The comments quoted were from the appeals court.