Court OKs FGIC $11 million plan sponsor agreement with subsidiary

By Jim Witters

Wilmington, Del., Feb. 28 - FGIC Corp. received court approval of its plan sponsor agreement, according to documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan sponsor agreement with subsidiary Financial Guaranty Insurance Co. calls for an $11 million cash contribution to the FGIC holding company, with the debtor assuming an amended and restated income tax allocation agreement.

The agreement increases the recoveries to unsecured creditors by more than 125%, compared to recoveries outlined in the original plan of reorganization, court documents state.

The debtor is an insurance holding company with no employees, no operations and no assets, other than its approximately $9.7 million in cash on hand and 100% of the common equity interests in Financial Guaranty Insurance Co., according to court documents.

FGIC, a New York-based privately held insurance company, filed for bankruptcy on Aug. 3, 2010. The Chapter 11 case number is 10-14215.

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