Spiegel, MBIA settle lawsuit

(Direct Newsline) The Spiegel Group and MBIA Insurance Corp. have settled their lawsuit over a planned $20 million payout, which Spiegel argued would have harmed Spiegel and its credit card unit, FCNB.

Filed by Spiegel and FCNB in April, the suit sought to prevent the diversion by MBIA of $20 million a month in excess cash flow to repay noteholders.

MBIA, which insures FCNB’s payments to noteholders, has agreed to withdraw its letter declaring the “payout event.” FCNB won a temporary restraining order in April, preventing MBIA from requiring that diversion of funds.

In a related development, Spiegel reported that FCNB has reached an agreement with the Office of the Comptroller of the Currency (OCC) over the disposition of the unit’s assets. Spiegel announced in February that it planned to sell the operation, following skyrocketing delinquency rates.

FCNB agreed to comply with OCC requirements for capital, liquidity, growth, and transactions with affiliates. In addition, the bank has obtained a $198 million guarantee through its majority shareholder. In addition, FCNB must provide the OCC with the details of a plan to sell or dispose of the bank.

“The terms and conditions of the bank’s agreement with the OCC are consistent with our internal objectives, which are focused on improving the quality of our credit-card portfolios while continuing our efforts to sell our credit-card business,” Spiegel Group CEO Martin Zaepfel said in a statement. “These efforts are ongoing, and we are actively engaged in discussions with interested parties.”