Case 6:12-bk MJ Doc 1900 Filed 08/30/16 Entered 08/30/16 13:50:01 Desc Main Document Page 1 of 7

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1 Main Document Page 1 of MILBANK, TWEED, HADLEY & McCLOY LLP Paul S. Aronzon, SBN Thomas R. Kreller, SBN Century Park East, 33rd Floor Los Angeles, CA Telephone: (424) Facsimile: (213) paronzon@milbank.com tkreller@milbank.com Attorneys for Creditor Ambac Assurance Corporation In re: CITY OF SAN BERNARDINO, CALIFORNIA, Debtor. UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA RIVERSIDE DIVISION Case No.: 6:12-BK MJ Chapter 9 AMBAC ASSURANCE CORPORATION S RESERVATION OF RIGHTS WITH RESPECT TO THE THIRD AMENDED PLAN FOR THE ADJUSTMENT OF DEBTS OF THE CITY OF SAN BERNARDINO, CALIFORNIA #

2 Main Document Page 2 of Creditor Ambac Assurance Corporation ( Ambac ), by and through its undersigned counsel, hereby submits this reservation of rights (the Reservation of Rights ) with respect to the Third Amended Plan for the Adjustment of Debts of the City of San Bernardino, California [Dkt. No. 1880] (the Plan ). 1 states as follows: In support of this Reservation of Rights, Ambac respectfully 1. On March 28, 2016, the City of San Bernardino (the City ), COMMERZBANK Finance & Covered Bond S.A. (formerly known as Erste Europaische Pfandbrief-Und Kommunalkreditbank AG in Luxemburg ( EEPK )), and Ambac (together with the City and EEPK, the Parties ) entered into a settlement agreement (the Settlement Agreement ) which set forth the general economic terms for the restructuring and treatment of the POB Claims under the Plan. The Settlement Agreement further contemplates that the Parties are to negotiate the form of the definitive documentation evidencing the City s restructured financial obligations to the holders of the POB Claims (the Definitive Documents ) Although the Parties are continuing to negotiate in good faith, as of the filing of this Reservation of Rights, the Parties have not yet finalized or agreed to the form of the Definitive Documents. Nevertheless, as contemplated by the Settlement Agreement, and in light of the September 2 nd deadline to vote on the Plan, Ambac intends to submit timely its vote accepting the Plan, provided that such accepting vote is conditioned on the Definitive Documents being in a form and substance reasonably satisfactory to Ambac. In addition, although it is not objecting at this time and does not anticipate any need to object to the Plan, Ambac hereby reserves and preserves all of its rights and defenses with respect to the City, the Plan and related confirmation proceedings, the Definitive Documents and the Chapter 9 Case generally, including the right to file further pleadings with respect to such matters. 1 Any capitalized term used but not defined herein shall have the meaning ascribed to it in the Plan, as applicable. 2 Specifically, Section 1.j states as follows: The documentation to be executed and delivered under the Conforming Plan to evidence and effect the City s financial obligations under paragraphs 1.a through 1.i shall conform to the terms hereof and shall otherwise be in form and substance reasonably satisfactory to the parties hereto; and such documents shall include any necessary consent or acknowledgment of the Trustee with respect to the terms hereof and thereof to the extent required by the documents evidencing the Pension Obligation Bonds. #

3 Main Document Page 3 of Dated: August 30, 2016 MILBANK, TWEED, HADLEY & MCCLOY LLP By: /s/ Thomas R. Kreller Thomas R. Kreller Paul S. Aronzon (SBN 88781) Thomas R. Kreller (SBN ) MILBANK, TWEED, HADLEY & McCLOY LLP 2029 Century Park East, 33rd Floor Los Angeles, CA Telephone: (424) Facsimile: (213) paronzon@milbank.com tkreller@milbank.com Counsel for Ambac Assurance Corporation #

4 Main Document Page 4 of 7 PROOF OF SERVICE OF DOCUMENT I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is Milbank, Tweed, Hadley & McCloy LLP, 2029 Century Park East, 33 rd Floor, Los Angeles, CA A true and correct copy of the foregoing document entitled AMBAC ASSURANCE CORPORATION S RESERVATION OF RIGHTS WITH RESPECT TO THE THIRD AMENDED PLAN FOR THE ADJUSTMENT OF DEBTS OF THE CITY OF SAN BERNARDINO, CALIFORNIA will be served or was served (a) on the judge in chambers in the form and manner required by LBR (d); and (b) in the manner stated below: 1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ( NEF ) Pursuant to controlling General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On August 30, 2016, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following person(s) are on the Electronic Mail Notice List to receive NEF transmission at the addresses stated below: Franklin C Adams franklin.adams@bbklaw.com; arthur.johnston@bbklaw.com; lisa.spencer@bbklaw.com Andrew K Alper aalper@frandzel.com; efiling@frandzel.com; ekidder@frandzel.com Christian U Anyiam anyiamlawfirminc@gmail.com; chrisanyiam4law@gmail.com Thomas V Askounis taskounis@askounisdarcy.com Marjorie Barrios iecivillaw@gmail.com; mbarrios@mbarrios.com Julie A Belezzuoli julie.belezzuoli@kayescholer.com; maocbca@kayescholer.com Anthony Bisconti tbisconti@bmkattorneys.com; admin@bmkattorneys.com Jeffrey E Bjork jbjork@sidley.com Michael D Boutell mdbell@comerica.com J Scott Bovitz bovitz@bovitz-spitzer.com John A Boyd fednotice@tclaw.net Jeffrey W Broker jbroker@brokerlaw.biz Laura L Buchanan lbuchanan@sycr.com Michael J Bujold Michael.J.Bujold@usdoj.gov Christopher Celentino celentinoc@ballardspahr.com; burkec@ballardspahr.com Lisa W Chao lisa.chao@doj.ca.gov Shirley Cho scho@pszjlaw.com Carol Chow carol.chow@ffslaw.com Alicia Clough aclough@loeb.com; ladocket@loeb.com; klyles@loeb.com; mnielson@loeb.com Marc S Cohen mscohen@loeb.com; klyles@loeb.com; mnielson@loeb.com; ladocket@loeb.com Christopher J Cox chris.cox@weil.com; janine.chong@weil.com Christina M Craige ccraige@sidley.com Alex Darcy adarcy@askounisdarcy.com; akapai@askounisdarcy.com Susan S Davis sdavis@coxcastle.com Robert H Dewberry robert.dewberry@dewlaw.net Donn A Dimichele dimichele_do@sbcity.org; brigman_ch@sbcity.org Todd J Dressel dressel@chapman.com; lillbyrd@chapman.com Warren M Ellis warren.m.ellis@gmail.com; ciprianturcu@presumeinnocence.com Scott Ewing contact@omnimgt.com; sewing@omnimgt.com; katie@omnimgt.com John A Farmer jfarmer@orrick.com John C Feely johnconrad85@gmail.com; john@lblegal.org Lazaro E Fernandez lef17@pacbell.net; lef-karina@pacbell.net; lef-mari@pacbell.net; lefkarina@gmail.com M Douglas Flahaut flahaut.douglas@arentfox.com Dale K Galipo dalekgalipo@yahoo.com; mpartow@galipolaw.com; lcostanza@galipolaw.com; rvasquez@galipolaw.com June F PROOF.SERVICE

5 Main Document Page 5 of 7 Victoria C Geary victoria.geary@boe.ca.gov Paul R. Glassman pglassman@sycr.com Richard H Golubow rgolubow@winthropcouchot.com; pj@winthropcouchot.com; vcorbin@winthropcouchot.com; mconour@winthropcouchot.com David M Goodrich dgoodrich@sulmeyerlaw.com; asokolowski@sulmeyerlaw.com; dgoodrich@ecf.inforuptcy.com; slee@sulmeyerlaw.com Morton J Grabel mortgrabel@aol.com; rowena@flatrocklegal.com Christian Graham cgraham23@dlblaw.net Everett L Green everett.l.green@usdoj.gov Asa S Hami ahami@sulmeyerlaw.com; agonzalez@sulmeyerlaw.com; agonzalez@ecf.inforuptcy.com; ahami@ecf.inforuptcy.com James A Hayes jhayes@jamesahayesaplc.com Eric M Heller eric.m.heller@irscounsel.treas.gov Richard P Herman rherman@richardphermanlaw.com Jeffery D Hermann jhermann@orrick.com Whitman L Holt wholt@ktbslaw.com Michelle C Hribar mch@sdlaborlaw.com; sak@sdlaborlaw.com Steven J Katzman SKatzman@bmkattorneys.com; admin@bmkattorneys.com Jane Kespradit jane.kespradit@limruger.com; amy.lee@limruger.com Mette H Kurth kurth.mette@arentfox.com; pchlum@foxrothschild.com Sandra W Lavigna lavignas@sec.gov Michael B Lubic michael.lubic@klgates.com; jonathan.randolph@klgates.com Michael C Maddux 1mcmnla@gmail.com; mikemadduxlaw@gmail.com Vincent J Marriott Marriott@ballardspahr.com; Pearsonj@ballardspahr.com David J McCarty dmccarty@sheppardmullin.com; nparker@sheppardmullin.com Reed M Mercado rmercado@sheppardmullin.com Dawn A Messick messickd@ballardspahr.com; chabota@ballardspahr.com Fred Neufeld fneufeld@sycr.com Aron M Oliner roliner@duanemorris.com Scott H Olson solson@vedderprice.com; ecfdocket@vedderprice.com; jcano@vedderprice.com; jparker@vedderprice.com Allan S Ono allan.ono@doj.ca.gov; beatriz.davalos@doj.ca.gov James F Penman Mark D Potter mark@potterhandy.com; rhondahandy@potterhandy.com; kevin@potterhandy.com Dean G Rallis drallis@afrct.com; msinclair@afrct.com; AFRCTECF@afrct.com; mpham@afrct.com; yblum@afrct.com Manoj D Ramia manoj.ramia@klgates.com; klgatesbankruptcy@klgates.com Jason E Rios jrios@ffwplaw.com; lnlasley@ffwplaw.com Esperanza Rojo contact@omnimgt.com; sewing@omnimgt.com Kenneth N Russak krussak@frandzel.com; efiling@frandzel.com; dmoore@frandzel.com Timothy M Ryan tryan@theryanfirm.com; ecf@theryanfirm.com Vicki I Sarmiento vsarmiento@vis-law.com; jfregoso@vis-law.com Mark C Schnitzer mschnitzer@rhlaw.com; mcschnitzer@gmail.com John R Setlich jrsetlich@setlichlaw.com Diane S Shaw diane.shaw@doj.ca.gov Ariella T Simonds asimonds@sidley.com Jason D Strabo jstrabo@mwe.com; cgilbert@mwe.com Cathy Ta cathy.ta@bbklaw.com; Arthur.Johnston@bbklaw.com; lisa.spencer@bbklaw.com Mohammad Tehrani Mohammad.V.Tehrani@usdoj.gov Sheila Totorp stotorp@clausen.com; jbrzezinski@clausen.com Benjamin R Trachtman btrachtman@trachtmanlaw.com; sstraka@trachtmanlaw.com Matthew J Troy matthew.troy@usdoj.gov United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov June F PROOF.SERVICE

6 Main Document Page 6 of 7 Anne A Uyeda auyeda@bmkattorneys.com Annie Verdries verdries@lbbslaw.com; Autodocket@lbbslaw.com Delilah Vinzon dvinzon@milbank.com Brian D Wesley brian.wesley@doj.ca.gov Arnold H Wuhrman Wuhrman@serenitylls.com Clarisse Young youngshumaker@smcounsel.com; levern@smcounsel.com Service information continued on attached page 2. SERVED BY U.S. MAIL OR OVERNIGHT MAIL(indicate method for each person or entity served): On August 30, 2016, I served the following persons and/or entities at the last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed. Service information continued on attached page 3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR (state method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on August 30, 2016, I served the following persons and/or entities by personal delivery, overnight mail service or (for those who consented in writing to such service method), by facsimile transmission and/or as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed. PRESIDING JUDGE'S COPY Honorable Meredith A. Jury U.S. Bankruptcy Court 3420 Twelfth Street, Suite 325 Riverside, CA Service information continued on attached page I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. August 30, 2016 Diane Muhrez /s/ Diane Muhrez Date Type Name Signature June F PROOF.SERVICE

7 Main Document Page 7 of 7 2. SERVED BY UNITED STATES MAIL: Counsel for Debtor: Stradling Yocca Carlson & Rauth, P.C. Attention: Paul R. Glassman 100 Wilshire Boulevard, 4 th Floor Santa Monica, CA Counsel for San Bernardino Police Officers Association: Aron M. Oliner Duane Morris, LLP One Market Plaza Spear Street Tower, Suite 2000 San Francisco, CA Counsel for San Bernardino City Professional Firefighters Local 891: David M Goodrich 333 South Hope Street, 35 th Floor Los Angeles, CA Corey W. Glave nd Street Hermosa Beach, CA Counsel for California Public Employees' Retirement System: Michael B. Lubic Manoj D. Ramia K&L Gates LLP Santa Monica Boulevard, 7 th Floor Los Angeles, CA Julie Anne Halter K & L Gates LLP 625 Fourth Avenue, Suite 2900 Seattle, WA Steven H. Felderstein Jason E. Rios Felderstein Fitzgerald Willoughby & Pascuzzi LLP 400 Capitol Mall, Suite 1750 Sacramento, CA June F PROOF.SERVICE