The nation's four big banks and seven other financial firms continue to challenge the 2009 restructuring of mortgage insurer MBIA Inc. Bank of America (BAC), JPMorgan Chase (JPM), Morgan Stanley (MS), Citi (C) and several other plaintiffs filed a brief with New York's highest appellate court this week, appealing a lower court's decision to dismiss the plaintiffs' case against MBIA. The original complaint accused MBIA of enacting a complex restructuring plan in February 2009 that essentially stripped "$5 billion in cash and securities out of MBIA Insurance to start a new business owned by MBIA," court records say. The plaintiffs contend MBIA did this to shield the mortgage insurer from potential payouts tied to the 2008-2009 economic meltdown. “This appeal is about whether state regulators can extinguish the substantial claims of victims of a massive fraudulent conveyance by approving MBIA’s restructuring in secret without even consulting policyholders," said Robert Giuffra Jr., an attorney for the financial firms. "We're confident that the court of appeals will uphold the rights of policyholders and reinstate their challenge to MBIA’s fraudulent conveyance." The complaint accuses MBIA of violating New York creditor and debtor laws when carrying out a restructuring in the midst of "an ongoing financial crisis that has made it increasingly likely that MBIA Insurance will have to pay out billions to plaintiffs and other holders,"court filings say. However, the case was thrown out in January, resulting in this week's appeal. A separate legal action is challenging the restructuring under New York state's Article 78. MBIA released a statement Wednesday saying, "As demonstrated by the banks' voluminous filing in the Article 78 proceeding, their rights to challenge the approval of transformation are fully protected.  We believe that the court of appeals will affirm the appellate division's dismissal of the plenary action and its conclusion that the pending Article 78 proceeding is the only appropriate forum for challenging the determination of the New York State Insurance Department." The lawsuit accuses MBIA of breaching contracts, unjust enrichment and of making fraudulent conveyances. In the original complaint, the plaintiffs say "instead of sitting down with policyholders to discuss consensual reorganization, defendants designed the fraudulent restructuring in secret." Write to Kerri Panchuk.