Ambac Files for Chapter 11

Ambac Financial Group Inc. filed for Chapter 11 bankruptcy protection after the Internal Revenue Service questioned the accounting that allowed the bond insurer to receive more than $700 million in tax refunds.

Ambac had already been warning investors that it could face bankruptcy when the IRS contacted the company in late October. But it was the inquiry from the IRS, and the possibility that the IRS could place a lien on the firm to recover the refund, along with a failure to reach an agreement with some of its senior debt holders, that pushed the bond insurer into the arms ...

Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

www.djreprints.com