MBIA yesterday said a lawsuit filed Wednesday by a number of financial institutions accusing it of an “unlawful restructuring” of its insurance operations is “without merit”.

As it has done in response to earlier lawsuits over the restructuring, MBIA reiterated that the New York Insurance Department approved the transaction. A group of hedge funds had already sued claiming the split advantaged public finance policyholders at the expense of structured finance policyholders, while one of MBIA Insurance Corp.’s largest surplus note holders also filed a lawsuit.

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