NEW YORK( TheStreet) -- Ambac Financial Group ( ABK) could have faced liquidation before the financial crisis, but its losses would have been greater, officials told a judge in the Wisconsin Circuit Court.

In a testimony to determine a restructuring plan for the company -- which is in Chapter 11 -- Roger Peterson, director of the department's Bureau of Financial Analysis and Examination, said that regulators had considered liquidation before electing to segregate its $50 billion portfolio of asset-backed security policies in 2008, according to a Bloomberg article.

Wisconsin Insurance Commissioner Sean Dilweg is working to finalize a reorganization plan that would pay segregated account claimants 25 percent of their claims in cash and the balance in nine years at 5.1 percent annual interest.

The plan has received opposition from hedge funds and from banks that have assets insured by Ambac who believe that policy holders may get moreback if the company had been liquidated.

Peterson said that liquidation would have triggered defaults that could have led to greater losses. Dilweg testified that those losses could have totaled between $1 billion and $3 billion and at the time of the segregation of Ambac Assurance, the holding company was paying $150 million per month on claims.

--Written by Maria Woehr in New York.

To contact the writer of this article, click here: Maria Woehr.

To follow the writer on Twitter, go to http://twitter.com/newsgirlmw.

To submit a news tip, send an email to: tips@thestreet.com.

If you liked this article you might like

Verdict Is in: Wall Street Gets Off Scot-Free

Verdict Is in: Wall Street Gets Off Scot-Free

Ambac Reorg Hits Court Snag: Report

Ambac Reorg Hits Court Snag: Report

Mortgage Insurers: Financial Weekly Recap

Mortgage Insurers: Financial Weekly Recap

Wall Street Whispers: Bank Stocks' Real Risk

Wall Street Whispers: Bank Stocks' Real Risk