Ambac confirms plan built around AAC tax settlement
Ambac Financial Group entered chapter 11 in the Southern District of New York as a holding company dependent on Ambac Assurance Corporation, its Wisconsin-domiciled financial guarantee insurer, after AAC stopped paying dividends and went into run-off. The petition listed more than 100,000 creditors, liabilities above $1 billion and assets in the $0-$50,000 range; David Wallis said Ambac also faced an IRS audit over tax accounting tied to roughly $7.3 billion of NOLs and had skipped a $2.8 million interest payment on 7.5% notes source filing source filing.
The court confirmed Ambac's Fifth Amended Plan on March 14, 2012, making the plan settlement among Ambac, the official creditors' committee, AAC, the AAC Segregated Account, Wisconsin's insurance regulator and the rehabilitator the case's organizing deal. The order preserved NOL value for the AAC subgroup and reorganized debtor, vested estate property in reorganized Ambac on the effective date, and set administrative and professional-fee deadlines after effectiveness source filing.
The confirmed structure impaired general unsecured claims, senior notes, subordinated notes, section 510(b) claims, intercompany claims and equity. Allowed Class 3, Class 4 and Class 5 creditors were slated to receive new common stock, with warrants issued to Class 3 and Class 5, while senior and subordinated note instruments and existing equity were to be cancelled on the surrender date. For restructuring professionals, the order converted a tax/regulatory insurance-holding-company crisis into an equity-and-warrant recapitalization path rather than an AAC rehabilitation-driven collapse source filing.