Ambac expects bankruptcy exit this week after IRS deal approved
April 29 (Reuters) - Ambac Financial Group Inc's attorney said on Monday the bond insurer could exit bankruptcy as soon as Wednesday after the company received court approval of a $101.9 million settlement with the Internal Revenue Service.
Judge Shelley Chapman of the U.S. Bankruptcy Court in Manhattan approved on Monday an agreement in which the U.S. government will receive $1.9 million from Ambac and $100 million from its subsidiary Ambac Assurance Corp.
Ambac also agreed to reduce by $1.1 billion its net operating loss carry-forwards, which the company could otherwise use to reduce future tax liability.
With the approval of the IRS settlement, Ambac expects to emerge on Wednesday after the company finalizes documents, the company's attorney, Peter Ivanick of Hogan Lovells, said at Monday's court hearing.
Once the second-largest U.S. bond insurer, Ambac suffered big losses after it strayed from insuring municipal bonds and began guaranteeing bonds backed by home loans.
The New York-based company filed for Chapter 11 protection from creditors in November 2010, and in March 2012 won approval of its reorganization plan.
When Ambac emerges from bankruptcy, the company's current stock will be canceled and creditors will be issued new shares.
Ambac's unsecured creditors are expected to receive between 8.5 percent and 13.2 percent of what they are owed, according to court documents.
The case is Ambac Financial Group Inc, U.S. Bankruptcy Court, Southern District of New York, 10-15973
- White House reverses, says Obama met uncle and lived with him during law school
- Flights delayed as air pollution hits record in Shanghai
- South Africa mourns Mandela, will bury him on December 15 |
- RPT-UPDATE 1-Ford leans on global Mustang to burnish overseas image
- Analysis: Boeing bidders dangle goodies to win 777X jetliner