Bank of America sues MBIA over bond tender interference
By Karen Freifeld
At issue are changes MBIA sought to make to the terms of some of its 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 senior notes in that tender and issued a default notice over the attempt to change terms.
The bank claims in the lawsuit that 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 policyholders.
In the lawsuit, filed late on 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.
MBIA spokesman Kevin Brown said: "Like its purported notice of default, Bank of America's latest lawsuit is meritless and we will respond to both accordingly."
MBIA shares fell 6.7 percent to $7.95 Friday on the New York Stock Exchange. Continued...