August 14, 2012 / 5:42 PM / 7 years ago

Bank of America drops Jefferson County appeal, sells bonds

Aug 14 (Reuters) - A federal appeals court allowed Bank of America Corp. to withdraw on Tuesday from a dispute connected to the bankruptcy of Alabama’s Jefferson County, after the bank sold most of its $227 million of sewer bonds.

Bank of America NA, a unit of Bank of America Corp, said in a court filing last week that within the past month it has sold all of its $65.7 million of the sewer bonds to a third party, leaving it with no economic interest in the outcome of the appeal.

The bank, along with bond insurer Assured Guaranty Municipal Corp., had been fighting a January bankruptcy court decision that stripped power from the creditor-friendly receiver for the bankrupt county’s massively indebted sewer system.

Bank of America NA and affiliate Blue Ridge Investments said last week that they wanted to drop their appeal in the U.S. Court of Appeals for the 11th Circuit in Atlanta.

Blue Ridge in a filing said that since Jefferson County filed for bankruptcy in November it has sold “the majority” of the $160 million worth of bonds it held and it no longer wants to rack up legal costs associated with the appeal.

Lloyds TSB Bank Plc also dropped its appeal last week after saying it had shed all of its interests in the bonds.

Other bondholders and Assured Guaranty may still pursue the appeal. The January ruling at issue wrested authority from receiver John Young, returning control of the sewer system and its $13 million of monthly revenues to county officials.

Jefferson County’s $4.23 billion bankruptcy case is the biggest municipal bankruptcy ever filed in the U.S.

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