Banks Seek $5 Billion from MBIA Insurance

MANHATTAN (CN) - Twenty banks and financial services companies claim MBIA Insurance fraudulently restructured itself in February to strip itself of $5 billion in cash and securities and start a new insurance business to duck its obligations to the banks. ABN Amro Bank and others claim that MBIA fraudulently conveyed assets to MBIA Insurance Corp. of Illinois.

The banks claim MBIA fraudulently restructured itself so that "regardless of the fate of MBIA Insurance, MBIA Inc. will continue to own - and its senior management will continue to be handsomely paid to operate - a new insurance business financed using assets stripped out of MBIA Insurance and shielded from its creditors."

Plaintiffs' lead counsel is Gandolfo DiBlasi with Sullivan & Cromwell.

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