New York's highest court revived on Tuesday a lawsuit by banks including Bank of America Corp and HSBC Holdings Plc challenging MBIA Inc's 2009 restructuring, which they complained was unfair to policyholders.

The restructuring approved by Eric Dinallo, New York's insurance superintendent at the time, was designed to protect the Armonk, New York-based company's municipal bond business from its troubled structured finance unit, which had suffered big losses from insuring mortgage-related debt.

Banks objected, saying the plan siphoned $5 billion from MBIA's main operating unit MBIA Insurance and transferred it to another entity, National Public Finance Guarantee Corp. They said this left MBIA unable to pay out on billions of dollars on their claims.

Tuesday's ruling by the New York Court of Appeals was 5-2.

(Reporting by Ben Berkowitz and Jonathan Stempel, editing by Gerald E. McCormick)

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