A suit that started with over a dozen plaintiffs against MBIA is down to two after Natixis Financial Products withdrew from the suit Monday.
The case against the bond insurer’s transformation into two companies is expected to go to trial Monday. Bank of America Merrill Lynch and Societe Generale are the remaining plaintiffs in the case in New York Supreme Court, New York County.
Natixis withdrew from the case “with prejudice” according to court documents. This means that Natixis is barred from suing MBIA on the same grounds. The phrase is sometimes used when a settlement is reached between a case’s parties.
A lawyer and a spokesperson for Natixis did not respond to requests for comment. An MBIA spokesman declined to comment.
“We look forward to the start of the Article 78 [transformation] trial on Monday and are confident that the evidence and witness testimony before the court will demonstrate that the unlawful restructuring of MBIA Insurance must be annulled,” said a BofA Merrill spokesman in a written statement.
MBIA experienced major losses on MBS following the housing bust and it petitioned the New York Insurance Department to allow it to split into two companies, with one of the companies focusing on insuring municipal bonds.
In February 2009, the department approved the transformation. In June 2009, several banks sued MBIA and the department seeking to reverse the transformation, claiming the split reduced the value of their insurance.
For almost three years the Article 78 case has advanced through the submission of depositions of witnesses, relevant documents and other written material. This is one of two cases seeking to reverse the transformation.
Along with MBIA and its two subsidiaries, the New York State Insurance Department and Eric Dinallo, in his former capacity as department superintendent, are defendants