$5-billion suit against MBIA resuscitated

New York Court of Appeals finds the fraud suit is not pre-empted by state insurance law

The heat is on again for MBIA Inc., and it may be starting to feel like 2007 all over again. New York’s Court of Appeals yesterday reinstated a breach-of-contract lawsuit against the insurer, saying that it is not pre-empted by state insurance law.

The suit, ABN Amro Bank NV v. MBIA Inc., was brought by a dozen banks claiming that MBIA used a number of transactions coinciding with its 2009 restructuring to shift more than $5 billion from a subsidiary that issued policies to a different subsidiary.

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