MBIA Inc. (MBI: Quote) Monday said the New York State Supreme Court upheld an earlier decision by New York State Insurance Department to approve MBIA's 2009 restructuring. Following the news, shares of MBIA jumped 24 percent on the New York Stock Exchange.
The New York state court dismissed a lawsuit by Bank of America and French bank Societe Generale SA which challenged the state agency's approval to split MBIA. Former New York State Insurance Department Superintendent Eric Dinallo had approved MBIA's restructuring in 2009.
Bank of America and Societe Generale were the only plaintiffs remaining, from the 18 banks that had initially challenged the decision. The banks alleged that the restructuring approval was based on improper and/or inaccurate details provided by MBIA.
New York Supreme Court Justice Barbara Kapnick, however, rejected the plaintiff's claims and said that Dinallo's approval of MBIA's restructuring was not "arbitrary and capricious, or contrary to law."
Commenting on the court's decision, MBIA Chief Executive Jay Brown said, "After almost four years of court filings, discovery and hearings, we are pleased that the New York State Supreme Court has affirmed what was obvious all along - that the New York State Insurance Department's approval of our Transformation was proper in all respects."
"With the Court's ruling now in hand, we look forward to resolving the remainder of our litigation so that we can support the financing needs of towns and cities across America by re-establishing National Public Finance Guarantee Corporation, our U.S. muni-only insurer, as a leader in the U.S. public finance insurance market," Brown added.
A separate lawsuit on the MBIA restructuring is still pending in the New York State court.
MBI closed Monday's trading at $12.78, up $2.47 or 23.96%, on a volume of 28.5 million shares. The stock slipped $0.16 or 1.25% in after hours trade.
by RTT Staff Writer
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