NY court dismisses bank lawsuit over MBIA restructuring
March 4 |
March 4 (Reuters) - A New York state court on Monday dismissed a lawsuit by a group of banks against bond insurer MBIA Inc that challenged MBIA's 2009 restructuring.
The suit, filed in the summer of 2009, challenged the approval by New York regulators of MBIA's split into two businesses -- a municipal bond insurer and a guarantor of structured finance products.
The banks claimed the restructuring was fraudulent and done in such a way as to leave MBIA insolvent to pay their claims.
New York Supreme Court Judge Barbara Kapnick ruled the state's insurance regulator did not act in an "arbitrary and capricious" manner and that it had a rational basis for allowing the restructuring.
MBIA shares rose more than 24 percent in afternoon trading after the ruling.
The banks' attorney was not immediately available for comment. MBIA had no immediate comment. A representative of Bank of America, the main remaining plaintiff in the case, also was not immediately available to comment.
The case is ABN AMRO Bank N.V. et al. vs. Eric Dinallo et al., New York Supreme Court, County of New York, No. 601846/09. (Reporting By Jonathan Stempel and Karen Freifeld in New York and Rick Rothacker in Charlotte, N.C.; Writing by Ben Berkowitz; Editing by Gerald E. McCormick and Leslie Adler)
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