Several mutual funds holding municipal bonds said they want a place at the negotiating table should Ambac Financial Group Inc. undergo any restructuring efforts.

Ambac, which in November warned that its liquidity could dry up by mid-2011, postponed the release of its fourth-quarter and year-end earnings last week, citing ongoing discussions with financial institution counterparties.

The delay prompted its regulator, the Wisconsin Office of the Commissioner of Insurance, to issue a response saying it "continues to work closely with all interested parties and remains focused on implementing a durable solution for all policyholders."

"Interested parties" should include mutual funds holding debt guaranteed by Ambac Assurance, the parent company's main insurer subsidiary, according to Harold Horwich, a partner at Bingham McCutchen LLP, the law firm representing the mutual funds.

"Our concern is that if the regulator and the company are going to do something here to restructure Ambac -- which we think is a good idea -- they need to do a comprehensive restructuring ... that resolves the entire Ambac problem, rather than trying to do this in a piecemeal fashion by negotiating one-off deals with separate constituents," Horwich said.

He would not name his clients, but said he represents 12 large, well-known funds.

Ambac Assurance reported earlier in the month that it paid last year nearly $1.4 billion in cash to commute eight structured finance transactions with multiple counterparties, reducing exposure by more than $8.6 billion.

"Our primary concern is that money is leaving this company at alarming rates and partial restructurings could increase the outflow of cash," Horwich said.

He declined to comment on what rights his clients believe are currently not being addressed. He also wouldn't specify what contact he has had with Ambac or its regulator.

The Wisconsin commissioner declined to comment.

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