Wisconsin Insurance Commissioner Endorses Plans to Strip Billions of Dollars of Net Operating Losses from Ambac Assurance to the Detriment of Policyholders
Ambac Financial Group is Permitted to Retain its Equity in Ambac Assurance While Policyholder Claims Are Severely Impaired
The RMBS Policyholders Group said that the events of the past 48 hours have demonstrated clearly that the Wisconsin Office of the Commissioner of Insurance ("OCI") failed in its statutory duty to protect policyholders of Ambac Assurance Corporation ("Ambac"), and actively participated in an arrangement that will divert billions of dollars of tax attributes from the insurance company that it is charged with regulating.
The bankruptcy filings of Ambac's parent, Ambac Financial Group, Inc. ("AFG") (NYSE: ABK) reveal that OCI is endorsing a term sheet that allows AFG to retain its equity ownership in Ambac, while simultaneously proposing a Plan of Rehabilitation in Wisconsin that impairs claims of policyholders, running afoul of the absolute priority rule. Moreover, the term sheet that the OCI endorses proposes to give to AFG billions of dollars of Ambac's net operating losses ("NOLs") and requires Ambac to compensate AFG for the use of any NOL even though that asset rightfully belongs to Ambac.
The Group is dismayed to discover that not only has the OCI failed in its statutory obligation to protect policyholders, but arranged behind closed doors with AFG, its management and creditors to strip policyholders of valuable assets. The Group resolves to challenge the OCI's actions.
On November 8, 2010, the RMBS Policyholders Group, along with other objectors representing more than $20 billion of insured securities, filed Objections to OCI's Plan of Rehabilitation with the Wisconsin Circuit Court. These many Objections make clear that the Plan is flawed on many grounds.
The Group's Objections, as well as those filed by other Ambac policyholders, are expected to be heard by the Wisconsin Circuit Court in a hearing scheduled to begin November 15, 2010.
Contacts:
Kekst and Company
Jeremy Fielding/Lin-Hua Wu
212-521-4800/415-391-4665
