Reorganization Under Chapter 11

9 Months Ended

Sep. 30, 2014

Reorganizations [Abstract]

Reorganization Under Chapter 11

REORGANIZATION UNDER CHAPTER 11

We followed the accounting prescribed by the Reorganizations Topic of the Accounting Standards Codification (the “ASC”) while Ambac was in reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code. On April 30, 2013, Ambac executed a closing agreement with the United States Internal Revenue Service (the "IRS") to conclude the settlement of a dispute (“IRS Settlement"). On May 1, 2013 (the “Effective Date”), the Second Modified Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. (the "Reorganization Plan") became effective and Ambac emerged from bankruptcy.

This IRS Settlement represented the final material contingency under the Reorganization Plan required for the adoption of fresh start financial statement reporting under the Reorganizations Topic of the ASC. As such, fresh start financial statement reporting ("Fresh Start") was adopted by the Company on April 30, 2013 (“Fresh Start Reporting Date”), incorporating, among other things, the discharge of debt obligations, issuance of new common stock and fair value adjustments. Adopting Fresh Start results in a new reporting entity with no beginning retained earnings or accumulated deficit. For periods after the Fresh Start Reporting Date, the Company will be referred to as Successor Ambac, whereas for all periods as of and preceding the Fresh Start Reporting Date, the Company will be referred to as Predecessor Ambac. Presentation of information for Successor Ambac represents the financial position and results of operations of Successor Ambac and is not comparable to Predecessor Ambac financial statements.

Reorganization items:

Professional advisory fees and other costs directly associated with our reorganization are reported separately as reorganization items pursuant to the Reorganizations Topic of the ASC. Reorganization items also include adjustments to reflect the carrying value of certain pre-petition liabilities at their allowable claim amounts, gain on the settlement of liabilities subject to compromise and fresh start reporting adjustments. The reorganization items in the Consolidated Statements of Total Comprehensive Income consisted of the following items:

	Period from July 1		Period from July 1
	through		through
	September 30, 2014		September 30, 2013
U.S. Trustee fees	$	—	$	13
Professional fees	2		(9		)
Gain from cancellation and satisfaction of Predecessor Ambac debt	—		—
Fresh start reporting adjustments	—		—
Total reorganization items	$	2	$	4

	Successor Ambac				Predecessor Ambac
	Period from January 1		Period from May 1		Period from January 1
	through		through		through
	September 30, 2014		September 30, 2013		April 30, 2013
U.S. Trustee fees	$	—	$	13	$	23
Professional fees	211		415		4,483
Gain from cancellation and satisfaction of Predecessor Ambac debt	—		—		(1,521,435		)
Fresh start reporting adjustments	—		—		(1,228,251		)
Total reorganization items	$	211	$	428	$	(2,745,180	)