City Settles with Ambac, Staves off Bankruptcy

The city has approved a settlement with bond insurer Ambac Assurance Corp., City Manager Steve Duran said in an email Friday night.

"It was a very complicated negotiation, with all parties doing their best to protect their interests and their rights," Duran said.

No details on the agreement were provided.

Ambac against Hercules on Jan. 30, after it became clear that the city would not make its Feb. 1 redevelopment bond debt interest payment. Ambac was forced to foot the bill and pay out bondholders. The company sued on the grounds that Hercules illegally diverted money meant to service bond debt. 

If Ambac prevailed in the lawsuit, it would have likely the city. The Hercules City Council and city staff met in closed session for the last three weeks to discuss the lawsuit and settlement.

In view of the settlement to court will be asked Monday "to dismiss the lawsuit without prejudice, which means it could be brought again if the terms of the settlement are breached," Duran said.