FGIC Corp files for Chapter 11 protection
FGIC Corp filed for bankruptcy protection late on Tuesday, saying it was not paid dividends by its troubled bond insurance unit Financial Guaranty Insurance Company since the onset of the financial crisis more than two years ago, court documents showed.
The parent company FGIC Corp listed estimated unsecured debt of $391.5 million and estimated assets in the range of $10 million to $50 million, filings show.
FGIC Corp's main business interest lies in the holdings of the bond insurer Financial Guaranty Insurance Company (FGIC) and it depends on dividend payments by FGIC for sustaining its operations.
FGIC had stopped paying dividends to parent FGIC Corp since January 2008, according to the filings submitted to the Southern District of New York bankruptcy court.
The deterioration in the U.S. housing and mortgage markets that began in 2007 and continues through today has had a significant adverse impact on the financial condition of the FGIC, the company said in the filing.
Due to sustained increases in the number of U.S. mortgage defaults and foreclosures, a large number of the FGIC-insured mortgage securities have soured leading to losses, the company said.
As a result, during 2007, 2008 and 2009, FGIC paid claims on its insurance policies far in excess of historical levels, the company said.
The continuing losses stemming from FGIC-insured mortgage securities resulted in FGIC's surplus to decrease to about negative $1.640 billion.
FGIC Corp said as a result of FGIC's inability to remit dividends to it since January 2008, it was unable to satisfy its obligations under the revolving credit agreement.
The case is IN re: FGIC Corp, Case No. 10-14215, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Sakthi Prasad in Bangalore; Editing by Valerie Lee)
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