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Ambac Adds Time for Bankruptcy Plan, Talks With Regulators

Ambac Financial Group Inc. (ABKFQ), the bankrupt holding company for a failed bond insurer, won more time to file its bankruptcy plan as it talks with regulators and tax authorities, and will now file a revised plan by Aug. 25.

U.S. Bankruptcy Court Judge Shelley Chapman in New York today approved an extension of Ambac’s time to control its reorganization. The company plans for a Sept. 8 hearing on its plan, a creditors’ vote in October and final court approval Nov. 8, Todd L. Padnos, a lawyer for the company, told Chapman.

“The fact remains that there are unresolved contingencies,” Padnos said.

Ambac might exchange its debt for stock in a new company or “deconsolidate” by breaking away from its operating unit, depending on whether a settlement is reached, according to a version of a plan filed July 6.

That plan didn’t have backing of the Office of the Commissioner of Insurance, the Wisconsin regulator overseeing the wind-down of the company’s failed bond insurer, Ambac Assurance Corp.

Since Ambac Financial filed for Chapter 11 protection in November, it has clashed with constituents, including its operating unit, over who gets $7.3 billion in net operating losses to use for tax benefits. The Internal Revenue Service has challenged tax claims by both companies.

The holding company case is In re Ambac Financial Group Inc. (ABK), 10-15973, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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