Ambac Settlement Terms Sent to Court, City Requests Hearing

The city has requested a telephone hearing on its tentative settlement with bond insurer Ambac Assurance Corp., City Manager Steve Duran said in an email Friday.

“If the court approves the stipulations, the non-sealed stipulation can be released,” Duran said.

There are two stipulations. One has details that will be made public. The other could be sealed. Both were signed by Ambac and the city’s outside counsel and delivered to court last week, Duran said.

 “(T)he parties agreed that some details of the agreement becoming public could hinder performance under the agreement,” Duran said.

The stipulations would detail the settlement terms of Ambac’s $4.1 million lawsuit against the city. Ambac filed a complaint against Hercules Jan. 30, when it received word that the city would not pay towards its Feb. 1 redevelopment bond interest obligations.

The city and Ambac worked on settling the matter out of court since before the lawsuit filing. A first tentative agreement was .

If Ambac prevailed in the suit on all of its terms, the city would have been forced to file for protection.

“This outcome will keep the City from having to consider pre-bankruptcy mediation and a potential Chapter 9 bankruptcy protection filing,” Duran said in his about the settlement.