Bank policyholders suing MBIA Inc. over its $5 billion restructuring are now able to pursue claims in court after the New York State Court of Appeals reinstated the lawsuit.

In a 5-to-2 ruling filed Tuesday, New York’s highest court reversed a January decision by the appellate division that dismissed the lawsuit. The original lawsuit was filed in May 2009 under the debtor and creditor law and common law and claimed the $5 billion restructuring of MBIA Insurance Corp. into two entities was fraudulent. The split resulted in one entity that insures municipal bond policies — National Public Finance Guarantee Corp. — and left MBIA Insurance holding riskier policies, such as mortgage-backed securities.

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