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Ambac Withdraws From Litigation Over Countrywide Settlement

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April 30 (Bloomberg) -- Ambac Assurance Corp. is withdrawing from litigation over Bank of America Corp.’s proposed $8.5 billion mortgage bond settlement, according to a court filing.

The bond insurer didn’t give a reason for the withdrawal in a letter filed today in New York State Supreme Court in Manhattan by Rachel A. Gupta, first vice president and assistant general counsel. Gupta declined to comment on the letter in a telephone interview.

Ambac intervened in the case along with others that have challenged Bank of America’s proposed settlement or sought more information. The proposed settlement, which would resolve claims from investors in Countrywide Financial mortgage bonds, is awaiting court approval.

Ambac Assurance was the second-largest bond insurer before the 2008 financial crisis, when defaults on mortgages swamped the company with claims. It guaranteed about $256 billion of $1.4 trillion in insured municipal debt, according to data compiled by Bloomberg.

A U.S. bankruptcy judge in Manhattan on March 15 approved a plan to reorganize the $1.7 billion in debt of New York-based Ambac Financial Group Inc., the bankrupt holding company for Ambac Assurance.

Ambac earlier this month sued Bank of America in New York State Supreme Court in Manhattan, accusing the company of breach of contact over mortgage-backed securities.

The case is In the application of the Bank of New York Mellon, 651786-2011, New York State Supreme Court (Manhattan).

To contact the reporters on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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