Bond insurer Ambac Financial has pushed back the voting deadline on a reorganization plan and a plan confirmation hearing.
Ambac Financial Group announced that claim holders against it would be given to Jan. 4, 2012, to vote on a plan issued in September. They would have until then to consider any proposed settlement with the Internal Revenue Service and vote on Ambac Financial’s second amended plan of reorganization. Originally the voting deadline was Nov. 23.
In addition, the plan objection deadline has been extended to Dec. 30 and the bankruptcy court hearing on plan confirmation has been moved to Jan. 19, 2012, from Dec. 8, 2011.
Asked how the decision was made to push the dates back, Michael Fitzgerald, Ambac managing director of investor relations, said: “We made a disclosure in our third quarter 2011 10Q issued on Nov. 9, 2011, about the status of a proposed settlement with the IRS. Given this disclosure, we felt it was appropriate to give voters an opportunity to reconsider their votes and submit new votes if they felt this information warranted such a change.”
Before the financial crisis disrupted the bond insurance industry there were several triple-A rated insurers competing in the municipal market, insuring about half of the new-issue market by par value in any given year.
Several of the companies expanded into insuring RMBS and ABS, and experienced severe losses when real estate values plummeted. As a result the insurers lost their triple-A ratings.
Ambac was one of the insurers that lost its triple-A rating and is currently prohibited from originating new bond insurance policies.
In late 2010 Ambac filed for bankruptcy protection from its creditors. It split its company into a bond insurance subsidiary, Ambac Assurance Corp. and a separate account that held toxic policies.
In May 2011 the Wisconsin commissioner of insurance, which regulates Ambac, proposed a plan for Ambac Financial that Ambac rejected. In July Ambac Financial filed a plan that the Wisconsin commission criticized.
This September Ambac Financial filed a second reorganization plan that it said had the approval of the Wisconsin commissioner, the rehabilitator of the segregated account, and a committee of unsecured creditors.
The plan aimed to settle a dispute between Ambac Assurance creditors and segregated account creditors over how to split the parent company’s tax losses and other resources.