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Ambac Files For Bankruptcy Under Chapter 11

DAVID PITT

DES MOINES, Iowa (AP) â¿¿ Bond insurer Ambac Financial Group Inc. said Monday that it has filed for Chapter 11 bankruptcy protection after it failed to raise additional capital.

The embattled company also failed to arrange a structured bankruptcy agreement with senior debt holders.

It has tried for two years to regain its footing after getting pummeled by the collapse of the housing market.

The company continues to operate under the jurisdiction of the bankruptcy court.

As of June 30, it had $1.62 billion in debt. Assets were listed in bankruptcy court documents as $394.5 million.

The bankruptcy filing halts any debt claims. The company also is seeking a court declaration that would wipe out its tax liability for tax years 2003 through 2008 and that would allow it to keep the tax refunds it received for those years.

Documents were filed in the U.S. Bankruptcy Court for the Southern District of New York.

The Vanguard Group Inc. was listed as holding 5.46 percent of the company's stock, or 16.5 million shares.

The shares are spread across seven funds and no single fund owns more than 5 percent, documents said.

Creditors holding the largest 20 unsecured claims include BNY Mellon, which held about $1.6 billion in unsecured notes.

The city of New York claimed a $42.3 million disputed tax assessment.

Several businesses claimed trade debt including Algorithmics Inc., which claims $81,656; RR Donnelly, $14,000; and Bloomberg LP at $6,602.

Ambac, which is based in New York, had said just a week ago that it planned to file for bankruptcy protection either through a prepackaged plan arranged with senior debt holders or through Chapter 11 proceedings.

A statement released late Monday indicated that an agreement with debt holders could not be reached.

However, Ambac has agreed to a nonbinding term sheet that will serve as a basis for further negotiations with the debt holders and that may allow the company to emerge from bankruptcy more quickly.

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