April 7 (Bloomberg) -- MBIA Inc. was sued by Third Avenue Management LLC, the New York company founded by mutual fund manager Martin Whitman, over claims the insurer’s split of its bond-insurance businesses hurts debt holders.
Three mutual funds managed by Third Avenue bought notes issued by MBIA Insurance Corp. in February 2008 based on assurances that the company was recapitalizing following losses in its structured finance insurance business, according to a Delaware Chancery Court lawsuit.
MBIA, the largest bond insurer by outstanding guarantees, said in February it was transferring $5 billion in cash and its public finance business to another entity that has no obligation to the notes, Third Avenue said in court filings. The suit contends the transfers were illegal and seeks to unwind them.
“MBIA sold us these surplus notes, and then to our surprise and distress, stripped away the principal assets as well as the only going concern operations within MBIA Insurance Corporation,” Whitman, chairman of the Third Avenue funds, said in a statement yesterday. “That’s wrong, and a big disappointment to us, especially after we went to bat for them with our pocketbooks and more.”
Continue on to read the complete story on Bllomberg.com.
Three mutual funds managed by Third Avenue bought notes issued by MBIA Insurance Corp. in February 2008 based on assurances that the company was recapitalizing following losses in its structured finance insurance business, according to a Delaware Chancery Court lawsuit.
MBIA, the largest bond insurer by outstanding guarantees, said in February it was transferring $5 billion in cash and its public finance business to another entity that has no obligation to the notes, Third Avenue said in court filings. The suit contends the transfers were illegal and seeks to unwind them.
“MBIA sold us these surplus notes, and then to our surprise and distress, stripped away the principal assets as well as the only going concern operations within MBIA Insurance Corporation,” Whitman, chairman of the Third Avenue funds, said in a statement yesterday. “That’s wrong, and a big disappointment to us, especially after we went to bat for them with our pocketbooks and more.”
Continue on to read the complete story on Bllomberg.com.
