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""Ambac Financial Group"":http://www.ambac.com/index.html has filed for Chapter 11 bankruptcy, according to an announcement issued by the company after the market closed on Monday.
[IMAGE]Ambac is one of the nation's largest bond insurers. The New York-based company insured billions in subprime mortgage securities during the heyday of housing's latest boom years, but has taken hit after hit since the market collapsed.
Ambac said in a press statement, ""The company will continue to operate in the ordinary course of business as ‘debtor-in-possession' under the jurisdiction of the bankruptcy court.""
The company says it was unable to raise additional capital as an alternative to seeking bankruptcy protection.
[COLUMN_BREAK]Ambac had indicated last week that it was hoping to reach a prepackaged bankruptcy arrangement with its senior debt holders, but an agreement could not be met for restructuring the company's outstanding debt.
Speculation of Ambac's bankruptcy has been swirling for some time, going back as far as March, when the Wisconsin Office of the Commissioner of Insurance ""seized about $35 billion"":http://dsnews.comarticles/regulator-seizes-ambacs-subprime-assets-2010-03-30 in policies related to subprime mortgage contracts from its subsidiary Ambac Assurance Corp., which is domiciled in Wisconsin.
Reportedly, the final straw for Ambac came when the Internal Revenue Service began inquiring in late October about the company's accounting practices related to $700 million in tax refunds.
According to Ambac's statement, it is seeking a declaration from the court stating the company has no tax liability for tax years 2003 through 2008 and that it is entitled to retain the full amount of the tax refunds received during those years.
Last week, Ambac failed to make a $2.8 million regularly scheduled interest payment to senior debt holders. As of June 30, 2010, the company had total debt outstanding amounting to $1.622 billion.
The company released its ""third-quarter financial results"":http://ir.ambac.com/phoenix.zhtml?c=80774&p=irol-newsArticle&ID=1494363&highlight Tuesday evening after market close. It reported net income of $76 million, or $0.25 per diluted share, for the three-month period. This compares to third quarter 2009 net income of $2.188 billion, or $7.58 per diluted share.
