NEW YORK ( TheStreet) -- MBIA (MBI - Get Report)'s stock was up on news that JPMorgan Chase (JPM - Get Report) and Barclays (BCS) have withdrawn from a lawsuit opposed to the insurer's plans to divide its insurance units.
MBIA shares rose 76 cents at $11.12 on the news.
"This is obviously a good step forward, but there are another 15 plaintiffs that, at the moment, intend to pursue the lawsuit," said Morningstar analyst Jim Ryan.
The lawsuit by the banks opposed MBIA's restructuring, which include plans to create a new company called National Public Finance Guaranty Corp. that would be capitalized with $5 billion in assets and ready to write new business. The remaining MBIA assets would then be left a questionable amount of capital to cover guarantees, the banks' lawsuit argued.Currently, only one of MBIA's competitor's, Assured Guaranty (AGO) is writing new business. "Until they can start writing new business, we don't see much new outlook for them," said Ryan."There are still several lawsuits against them and there is the question about how much they will get back from the putbacks." The move by JPMorgan and Barclays could set a precedent for other banks to drop their lawsuits preventing MBIA's reorganization. The court documents, which can be found on the insurer's website, show that other plaintiffs in the case include Royal Bank of Scotland (RBS - Get Report), BNP Paribas (BNP), Citibank (C - Get Report), HSBC (BCS), Credit Agricole (ACA), Merrill Lynch, Bank of America (BAC - Get Report), Morgan Stanley (MS - Get Report), Royal Bank of Canada (RBC - Get Report), Societe Generale> (GLE), Wachovia, UBS (UBS) among others. For more on the future of MBIA and the monolines check out, "Monolines: The End Of The World As We Know It." --Written by Maria Woehr in New York.
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