Bond insurer Assured Guaranty Municipal Corp. was blocked by a judge from proceeding with a lawsuit against JPMorgan Chase & Co. on the grounds that it would interfere with the reorganization of Jefferson County, Alabama, the biggest U.S. municipal bankruptcy to date, Bloomberg News reported today. Bankruptcy Judge Thomas B. Bennett found that the case Assured has against JPMorgan in New York state court involves the same facts, circumstances and lawyers as a similar case in which Syncora Guarantee Inc. sued Jefferson County. Because Assured had not named the county in its case, the insurer argued that its lawsuit should proceed. "The degree of sameness between the Assured action and the Syncora action requires equality of treatment," Bennett ruled. In 2011, Jefferson County filed for bankruptcy protection from its creditors, blaming the loss of a business-related tax and more than $3 billion in warrants that the sewage system could not repay. Syncora and Assured insured some of the sewer warrants. They argued in their lawsuits that the insurance policies were only written because the county and JPMorgan, the underwriter for the warrants, committed fraud.
