NU Online News Service, Nov. 9, 2:16 p.m. EST
Ambac Financial Group was not able to reach an agreement with debt holders and has filed for Chapter 11 bankruptcy relief.
According to a statement from Ambac, the company has not been able to raise capital and could not agree to terms with a committee of debt holders to restructure its debt under a pre-packaged bankruptcy agreement.
As of the end of June, Ambac's debt stood at more than $1.6 billion. Payment obligations are put on hold due to the bankruptcy filing.
One week ago, a filing with the U.S. Securities and Exchange Commission indicated Ambac chose not to make a scheduled interest payment on senior notes due in 2023, which could allow its debtors to accelerate the maturity of the notes if a payment was not made within 30 days. The company had said a bankruptcy filing was possible before the end of the year.
The New York-based guarantee insurer said negotiations with the committee of debt holders will continue. The company agreed to a non-binding set of terms on conditions with the committee "that may allow the company to emerge from bankruptcy more expeditiously," Ambac said in a statement.
For the first six months of 2010, net losses for Ambac stood at $748 million. Results were affected by commutation settlements on credit default obligations of asset-backed securities and claim payments on residential mortgage-backed securities and investment losses related to securities.
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