MBIA, Inc.

[Hawk4value]

Marty Whitman, in a recent quarterly review, stated that the recent transfer of over $5bil of liquid assets, as well as the profitable municipal insurance business, from MBIA Corp. to MBIA, Inc. amounts to asset stripping and is illegal. Basically, MBIA, Inc. (the Holding Company---publically traded) is stripping assets from its principal insurance subsidiary, MBIA Corp., in order to "ring fence" the holding company from all structured finance obligations. Since Marty owns $362mil of insurance subsidiary Surplus Notes, he is suing MBIA, Inc. in an attempt to reverse the transfer.

 

He further states that if his lawsuit is successful then MBIA, Inc. common is worthless. Does any Board member have an opinion on this, or know the status of the lawsuit??????

[nodnub]

According to this bloomberg article http://www.bloomberg.com/apps/news?pid=20601009&sid=al8OOPZn_wAE

the case is Third Avenue Trust v. MBIA Insurance Corp., 4486, Delaware Chancery Court (Wilmington).

[twacowfca]

Marty Whitman, in a recent quarterly review, stated that the recent transfer of over $5bil of liquid assets, as well as the profitable municipal insurance business, from MBIA Corp. to MBIA, Inc. amounts to asset stripping and is illegal. Basically, MBIA, Inc. (the Holding Company---publically traded) is stripping assets from its principal insurance subsidiary, MBIA Corp., in order to "ring fence" the holding company from all structured finance obligations. Since Marty owns $362mil of insurance subsidiary Surplus Notes, he is suing MBIA, Inc. in an attempt to reverse the transfer.

 

He further states that if his lawsuit is successful then MBIA, Inc. common is worthless. Does any Board member have an opinion on this, or know the status of the lawsuit??????

 

 

TAF's suit was dismissed Oct28, 2009 for lack of jurisdiction, the court stating that the class action suit by the banks et al supercedes the Delaware suit.  When did Marty make that statement about the consequences of a favorable victory for TAV?  

 

The claim against MBIA seems meritorious.  The other NY suit by the banks is progressing with a recent favorable ruling that the banks lawsuit should not be dismissed.  Aurelius also has a similar lawsuit in Federal court that is open.

[Hawk4value]

Marty made the statement in his 10/31/2009 Fund Report. Do you know where I can access and read about the favorable court ruling you mentioned???

[twacowfca]

Marty made the statement in his 10/31/2009 Fund Report. Do you know where I can access and read about the favorable court ruling you mentioned???

 

It's on the web in Feb 2010.  Didn't read the full articles because this is routine stuff: The defendants try to get the case dismissed -- then if the case has merit and no technical disqualifiers they lose the motion for summary judgement or whatever, apparently the current stage.  Then discovery begins.  Then there are motions which result in delays.  Then a trial date is set.  Then, in a big case like this with meritorious claims there is usually a negotiated settlement fairly late in the process, perhaps on the trial date or soon after trial begins.  All this can take several months.  Stay tuned for further developments.

[twacowfca]

I read the Delaware Court's memo related to the decision to dismiss TAF's suit.  They key issue which should be tried appropriately in NY is whether the NY Insurance Superintendent's decision to allow the split of MBIA 's business and transfer of assets to a new company trumps the strong protections in the debt instrument that prohibit such a transfer without the approval of the debt holders.

 

The Delaware  judge noted that the NY Insurance Superintendent's decision to allow the transfer was based entirely on the representations of MBIA and not as a result of an adversarial process involving the debtholders, and that decision did not address the contractual rights of the debtholders.

 

Strange things can happen in court, and I haven't read the recent February NY court decisions, but it would be surprising if the debt holders are not ultimately successful in negotiating the restoration of most of the assets backing the debt or compelling the return of all the assets in the unlikely event that the issue has to be decided by trial (and upheld after appeal).  In these events, MBIA may or may not be a zero, but it's value should be drastically reduced.  :)

 

The Delaware suit was dismissed without prejudice, meaning that TAF could file another suit in Delaware if they don't like the terms of the potential eventual settlement of the NY class action suit against MBIA by the banks et al. ( after the NY court decides if the contractual rights of the debtholders trump the Insurance Superintendent's decision to allow the transfer of assets).  Or TAF might be able to sue in NY if they decide to opt out of the class represented by the banks.  :)

[Richard]

MBIA is getting paid (https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=9ZFMTidmWdwF6g09nYZ_PLUS_nw==&system=prod):

 

Accordingly, it is ORDERED that the Clerk is directed to enter judgment in favor

of Plaintiff MBIA Insurance Corporation and against Defendant DLJ Mortgage

Capital, Inc. in the amount of $603,984,008.21 plus pre-judgment contractual

interest at a rate of Citibank N.A. Prime plus 3%, currently 6.25% per annum

($102,352.82 per diem) from January 26, 2021 through the date judgment is entered

and thereafter at the statutory rate.

 

 

[Guest cherzeca]

MBIA is getting paid (https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=9ZFMTidmWdwF6g09nYZ_PLUS_nw==&system=prod):

 

Accordingly, it is ORDERED that the Clerk is directed to enter judgment in favor

of Plaintiff MBIA Insurance Corporation and against Defendant DLJ Mortgage

Capital, Inc. in the amount of $603,984,008.21 plus pre-judgment contractual

interest at a rate of Citibank N.A. Prime plus 3%, currently 6.25% per annum

($102,352.82 per diem) from January 26, 2021 through the date judgment is entered

and thereafter at the statutory rate.

 

man, good for you Richard, I had moved on from MBI a long time ago.