Bankruptcy Judge Thomas Bennett ruled Tuesday that Assured Guaranty Municipal Corp. cannot proceed with its lawsuit against JPMorgan in New York State court because it involves bankrupt Jefferson County, Ala.

Assured is bound by an automatic stay that went into effect when the county filed for Chapter 9 bankruptcy in November 2011, stopping existing suits and any new ones from going forward, Bennett said. He characterized the pending suit as “demonstrating the downside of creativity” in trying to avoid the shield afforded debtors by the stay because Assured argued that it did not sue the county.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.