On March 11, 2009, five holders of securities and other financial instruments for which MBIA Insurance Corporation (MBIA Insurance) issued financial guarantee insurance filed a lawsuit in the United States District Court for the Southern District of New York against MBIA Inc. (MBIA), MBIA Insurance and MBIA Insurance Corporation of Illinois (MBIA Illinois).  The class action suit alleges that the February spinoff of MBIA Insurance’s municipal bond insurance business into a separate entity owned entirely by MBIA constituted a “massive fraudulent conveyance transaction” that damaged the holders of securities and financial instruments covered by financial guarantee policies issued by MBIA Insurance by transferring assets out of MBIA Insurance without adequate consideration and weakening the ability of MBIA Insurance to pay potential claims on those policies.  We detail the factual allegations and legal theories advanced in the complaint, and the relief requested by the hedge fund plaintiffs.