Can ABK Survive?

I'm kind of falling behind here in keeping up with the news announcements. Whilst I was on my three week holiday and watching my partial positions in NYX and BAC advance like magic, I got so distracted that I didn't even realise Ambac had recently quietly defaulted on one of its bond issues (CUSIP 023139AF5).

Whilst ABK is taking some proactive action in an attempt to stay above the water under the bridge by launching a lawsuit against Citi and Credit Suisse, the question remains: can ABK survive?

Interestingly, Citi is a top institutional holder of ABK shares. I would be shooting myself in the foot by suggesting a short on ABK shares, but it would probably turn out to be one of my better trade ideas. For a play like this, I'd think options along with stringent money management would be the way to go.

Liabilities are high and cash is short for ABK, so could it only be a matter of time?

Divine Intervention, please - for I am long both ABK bonds and shares...

Sigh, oh sigh...