Ambac Assurance Corp. said that its final settlement in Detroit's bankruptcy case over the treatment of limited-tax general obligation bonds that it insured for the city would result in a 34 percent recovery, plus another possible 19 percent from a litigation reserve, Reuters reported on Friday. The reserve would contain funds related to litigation over Detroit's pension debt, according to Ambac. The reserve is based on certain notes the city will use for recoveries for some of its unsecured creditors. "Ambac Assurance's share of the B notes may equate to a recovery of an additional 19 percent of its allowed claim with respect to the LTGO bonds," the bond insurer said in a statement. "If the city loses the litigation, Ambac Assurance will not get any further recovery. If the litigation is settled, Ambac Assurance may get a partial incremental recovery," it added. Detroit has asked the bankruptcy court to invalidate $1.45 billion of pension certificates of participation the city sold in 2005 and 2006.
