Ambac Files For Bankruptcy Under Chapter 11 Of The United States Bankruptcy Code
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac or the Company) announced today that it has filed for a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). The Company will continue to operate in the ordinary course of business as “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.
The Company was unable to raise additional capital as an alternative to seeking bankruptcy protection and was also unable to agree to terms with an ad-hoc committee of certain senior debt holders in order to restructure its outstanding debt through a prepackaged bankruptcy proceeding. However, Ambac has agreed to a non-binding term sheet that will serve as a basis for further negotiations with the ad-hoc committee and that may allow the Company to emerge from bankruptcy more expeditiously.
As of June 30, 2010, the Company had debt outstanding amounting to $1,622 million. As a result of the bankruptcy filing, Ambac’s outstanding debt securities are accelerated. Upon the bankruptcy filing, any efforts to enforce such payment obligations under the related debt indentures are stayed pursuant to Bankruptcy Code.
In connection with the bankruptcy filing, Ambac is seeking an interim order restricting certain transfers of equity interests in and claims against the Company that is retroactive to the time of filing. The purpose of the interim order is to preserve the Company’s net operating losses (“NOLs”), which totaled approximately $7 billion as of June 30, 2010. Under section 382 of the Internal Revenue Code of 1986, as amended, transfers by persons or entities holding five percent or more of the Company’s outstanding equity interests could impair or permanently eliminate the Company’s NOLs. Additionally, transfers of claims against the Company by persons or entities who may receive five percent or more of the reorganized Company’s stock pursuant to a bankruptcy plan of reorganization may impair or permanently eliminate the Company’s NOLs.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV