Ambac Financial Group Inc. said it is considering filing a prepackaged bankruptcy because it is unable to take dividends from its bond insurance unit, Ambac Assurance Corp., to cover holding company expenses.
"It is highly unlikely AAC will be able to make dividend payments to the company in the foreseeable future," Ambac said in a regulatory filing Tuesday, referring to its principal operating unit.
Ambac Assurance is issuing so-called surplus notes to policyholders rather than covering their full claims. Ambac announced Monday that it replaced $16.4 billion of collateralized debt obligations backed by subprime mortgages in exchange for $2.6 billion in cash and $2 billion of newly issued AAC surplus notes.
