A $5 billion fraud suit against bond insurer MBIA over its 2009 breakup is not preempted by New York’s Insurance Law, the Court of Appeals ruled yesterday.

In allowing the case to proceed, the five-judge majority found that dismissal of the suit, ABN Amro Bank NV v. MBIA Inc., 601475/09, would violate the due process rights of a group of banks that were policyholders and did not have the opportunity to challenge the approval of the breakup by the state’s superintendent of insurance.

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