SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ABN AMRO BANK N.V.: BARCLAYS BANK PLC; BNP PARIBAS; CALYON; : CANADIAN IMPERIAL BANK OF : 09601475 2475 COMMERCE; CITIBANK, N.A.; HSBC: Index No.: BANK USA, N.A; JPMORGAN CHASE BANK, N.A.; KBC INVESTMENTS : CAYMAN ISLANDS V LTD,; MERRILL: AMERICA, N.A.; MORGAN STANLEY CAPITAL SERVICES INC.; NATIXIS; NATIXIS FINANCIAL PRODUCTS INC COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. NEW YORK BRANCH; ROYAL BANK es OF CANADA; THE ROYAL BANK OF =: to € ' 7 gE Dp SCOTLAND PLC; SMBC CAPITAL MARKETS LIMITED; SOCIETE : : GENERALE; UBS AG, LONDON i BRANCH; and WACHOVIA BANK, N.A., : faa: ee : aouKny Wacom + against - MBIA INC., MBIA INSURANCE : CORPORATION, and MBIA INSURANCE: CORP. OF ILLINOIS, Plaintiffs ABN AMRO Bank N.V.; Barclays Bank PLC; BNP Paribas; Calyon; Canadian Imperial Bank of Commerce; Citibank, N.A.; HSBC Bank USA, N.A.; JPMorgan Chase Bank, N.A.; KBC Investments Cayman Islands V Ltd.; Merrill Lynch International; Bank of America, N.A.; Morgan Stanley Capital Services Inc.; Natixis; Natixis Financial Products Inc.; Codperatieve Centrale Raiffeisen-Boerenleenbank B.A., New York Branch; Royal Bank of Canada; The Royal Bank of Scotland plc; SMBC Capital Markets Limited; Société Générale;UBS AG, London Branch; and Wachovia Bank, N.A, (collectively, “Plaintifis"), for their complaint against Defendants MBIA Inc., MBIA Insurance Corporation (“MBIA Insurance), and MBIA Insurance Corp. of Illinois (“MBIA Illinois”) (collectively, “Defendants”), allege as follows: PRELIMINARY STATEMENT 1, This action arises out of Defendants’ unlawful restructuring of MBIA Insurance in February 2009 (the “Fraudulent Restructuring”), Defendants devised the Fraudulent Restructuring to strip $5 billion in cash and securities out of MBIA Insurance (the primary operating subsidiary of MBIA Inc.) to start a new insurance business owned by MBIA Inc. This was done amidst an ongoing financial crisis that has made it increasingly likely that MBIA Insurance will have to pay out billions to Plaintiffs and other holders of financial guerantec insurance policies written by MBIA Insurance. In an unlawful attempt to escape MBIA Ingurance’s coverage obligations to Plaintiffs and other policyholders, Defendants executed a seties of fraudulent conveyances, in breach of MBIA Insurance’s contracts, to transfer MBIA Insurance assets into MBIA Illinois—an entity that Defendants structured to be free from liabilities or other obligations to Plaintiffs. 2. Defendants have attempted to justify their unlawful siphoning of assets out of MBIA Insurance and into MBIA Illinois by pretending that they were acting to bolster the municipal-bond market. That is disingenuous public posturing; Defendants are run by savvy executives who are well aware of methods for launching a new insurer without harming existing policyholders. They also know that Plaintiffs are among the world’s leading financial institutions, which previously have worked with distressed insurers to reach negotiated solutions that maximized value and respected the interests of all stakeholders (particularly existing municipal-bond policyholders). But instead of sitting down with policyholders to discuss a consensual reorganization, Defendants designed the Fraudulent Restructuring in secret, and onlyannounced it to the public after they already had shuffled assets in a manner that (a) benefited MBIA Inc, and its management, and (b) barmed MBIA Insurance's structured-finance policyholders, including Plaintiffs 3. Both of these effects were intentional. Through the Fraudulent Restructuring, Defendants ensured that, regardless of the fate of MBIA Insurance, MBIA Ine. will continue to own (and its scnior management will continue to be handsomely paid to operate) a new insurance business financed using assets stripped out of MBIA Insurance and shielded from its creditors. In addition, MBIA Inc.'s CEO publicly acknowledged—the very day the Fraudulent Restructuring was announced—that one of the Fraudulent Restructuring’s objectives was to weaken MBIA Insurance so much that structured-finance policyholders like Plaintiffs would be pressured to “cut a settlement today” and surrender their policies for a fraction of their former values. 4. Defendants’ unlawful gamesmanship has left Plaintiffs with no choice but to sue, As a result of the Fraudulent Restructuring, MBIA Insurance's credit rating has been downgraded to “junk” and, on information and belief, MBIA Insurance is now insolvent. As various commentators have observed, the credit markets expect that MBIA Insurance will “wither and die,” thereby saddling policyholders like Plaintiffs with billions in losses while MBIA Inc, continues to own and operate MBIA Illinois. And Defendants have utterly refused to enter into any meaningful dialogue with Plaintiffs to consensually redress the injuries inflicted by the Fraudulent Restructuring, Plaintiffs ask this Court to sot aside Defendants’ fraudulent conveyances and to award other remedies. 5. Prior to the Fraudulent Restructuring, MBIA Insurance was the world's largest “monoline” insurer, writing exclusively financial guarantee insurance policies. In return for premiums, MBIA Insurance wrote financial guarantee policies covering a variety of underlying financial instruments. Under each policy, MBIA Insurance: unconditionally and