Chapter 11 bankruptcy protection could be the future of Ambac Financial Group Inc., the second-largest U.S. bond insurer, by the end of the year, after the company announced Monday that they would not make their scheduled interest payment.
The interest payment is on the company’s 7.5-percent debentures that mature on May 1, 2023. If Ambac does not pay in 30 days, the company will default.
Reuters noted that the company lost 59.8 percent of its stock after the announcement was made.
The company is $1.62 billion in debt as of the end of June and the release said they were unable to raise additional capital.
The company has been battered since the end of 2007, when the subprime mortgage bubble burst. The firm sold protection on mortgage securities and has struggled to keep itself afloat.
A prepackaged bankruptcy proceeding is currently being sought by the company to restructure its outstanding debt. If the company cannot come to an agreement with its senior debt holders, then it will be forced to file Chapter 11 at the end of the year.
“Such filing may be with or without agreement with major creditor groups concerning a plan of reorganization,” a press statement from the company read. “The filing for bankruptcy protection would accelerate the maturity of all of the Company’s indebtedness.”
The interest payment is on the company’s 7.5-percent debentures that mature on May 1, 2023. If Ambac does not pay in 30 days, the company will default.
Reuters noted that the company lost 59.8 percent of its stock after the announcement was made.
The company is $1.62 billion in debt as of the end of June and the release said they were unable to raise additional capital.
The company has been battered since the end of 2007, when the subprime mortgage bubble burst. The firm sold protection on mortgage securities and has struggled to keep itself afloat.
A prepackaged bankruptcy proceeding is currently being sought by the company to restructure its outstanding debt. If the company cannot come to an agreement with its senior debt holders, then it will be forced to file Chapter 11 at the end of the year.
“Such filing may be with or without agreement with major creditor groups concerning a plan of reorganization,” a press statement from the company read. “The filing for bankruptcy protection would accelerate the maturity of all of the Company’s indebtedness.”
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