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Ambac files for Chapter 11 Bankruptcy
SAN FRANCISCO (11/10/10)--Ambac Financial Group Inc. Monday filed for Chapter 11 bankruptcy after failing to raise additional capital, the bond insurer said. Several corporate credit unions have mortgage-related investments insured by Ambac and incurred losses during the financial crisis. Ambac will continue to operate as “debtor-in-possession” under the jurisdiction of the Bankruptcy Court (MarketWatch Nov. 10). The company also failed to reach an agreement on restructuring its debt with creditors. However, it has agreed to a non-binding term sheet that will allow it to further negotiate with the creditors and emerge from bankruptcy more quickly, it said, according to MarketWatch. As of June 30, the company had outstanding debt of $1.62 billion. Ambac, a bond insurer for mortgage-backed securities (MBS) whose losses have contributed to losses at several corporate credit unions, had been sued by a group of hedge funds trying to block transfers of funds from its bond-insurance unit to the holding company (News Now Sept. 2).


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