Ambac Financial Group Inc., parent of the troubled Wisconsin-domiciled bond insurer Ambac Assurance Corp., filed for Chapter 11 bankruptcy relief on November 8, 2010. As was alluded to in our blog post last week, Ambac has been unable to raise additional capital or come to terms with its debt holders. Additionally, while Ambac had originally sought to enter bankruptcy as part of a prepackaged agreement, this too failed. Ambac’s bankruptcy filing comes amid a recent disclosure it made in a filing with the U.S. Securities and Exchange Commission that it had not made a senior note debt payment, and that such failure would allow its debt holders to accelerate their maturity if payment was not received within 30 days.
Court filings made with the United States Bankruptcy Court for the Southern District of New York indicate that as of September 30, 2010, Ambac’s total liabilities stand at $1.7 billion, with $1.6 billion owed to unsecured creditors, including both private and government entities. Ambac will continue to operate in the ordinary course of business as a debtor-in-possession under the jurisdiction of the bankruptcy court. The bankruptcy filing will stay all payment obligations.
Ambac’s press release indicates that it will continue to work with its debt holders to restructure its outstanding debt in order to emerge from its bankruptcy more expeditiously.