* IRS to be paid $101.9 million
* Ambac sees accord as step toward emerging from Chapter 11
April 8 Ambac Financial Group Inc on
Monday said it has reached a $101.9 million settlement of a
dispute with the Internal Revenue Service, a key step in the
bond insurer's effort to emerge from bankruptcy.
The settlement calls for $1.9 million to be paid by Ambac,
and for $100 million to be paid by its Ambac Assurance Corp unit
or a "segregated account" overseen by Wisconsin's insurance
commissioner that contains many of the unit's obligations.
It also reduces by $1.1 billion Ambac's net operating loss
carry-forwards, which the company could otherwise use to reduce
future tax liability.
In a statement, Chief Executive Diana Adams called the
settlement fair and equitable to the company and creditors, and
said it "puts us in a favorable position to emerge from
The settlement requires approval by U.S. Bankruptcy Judge
Shelley Chapman in Manhattan. A hearing is scheduled for April
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.
Last month, it reaffirmed that its common stock will be
worthless following the New York-based company's emergence from
MBIA Inc, Ambac's larger rival, won approval from
New York insurance regulators in 2009 to split into a municipal
guarantee business and a structured finance unit that also had
large mortgage losses.
Shares of Ambac closed Monday down 0.13 cent at 4.77 cents
on the Pink Sheets.
The case is In re: Ambac Financial Group Inc, U.S.
Bankruptcy Court, Southern District of New York, No. 10-15973.