View this article online: https://www.insurancejournal.com/news/national/2012/12/14/274080.htm
Bank of America Corp. has sued bond insurer MBIA Inc. in a New York state court for allegedly interfering with a tender offer to buy MBIA’s bonds.
At issue is a change MBIA sought to make to the terms of some bonds to eliminate the risk that it might be considered in default if a troubled unit were put into rehabilitation or liquidation by New York regulators.
Bank of America countered with an offer to buy the bonds, saying it believed the changes would increase the risk of MBIA’s insurance unit being placed in rehabilitation or liquidation, which could jeopardize all policyholder claims.
On Thursday, Bank of America said it had purchased $136 million of a senior note in that tender, and issued a default notice over the attempt to change terms.
The bank claims the consent solicitation was the latest of MBIA’s “premeditated and subversive actions” since 2008 to benefit executives and stockholders to the detriment of Bank of America and other policy holders.
In the suit, filed late Thursday, Bank of America alleged that MBIA illegally interfered with its tender offer and asked for the consent solicitation and amendment to be declared invalid. The bank also is seeking punitive and other damages.
An MBIA spokesman did not have an immediate comment on the suit. MBIA shares fell 1.9 percent to $8.36 in morning trading.