Third Avenue Management has sued MBIA units, alleging the bond insurer’s decision to split its businesses harmed the firm as a bondholder, The Wall Street Journal reports. The lawsuit claims the division resulted in an “asset stripping” that defaulted its investors.

Two investment funds managed by Third Avenue, holding around $400 million in ‘surplus notes’ issued by MBIA Insurance, have sued the firm and its sister company. MBIA separated its municipal-bond guaranty business from its mortgage exposures to revive its business of writing new bond guarantees.

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