It was literally a last-minute intervention. At 11.59am yesterday (8 October), the Federal Reserve extended its standstill on Citigroup’s lawsuit over Wells Fargo’s bid for US bank Wachovia.
Wachovia’s lawyers at Boies Schiller & Flexner, Citigroup’s litigators at Gregory Joseph Law Offices and Wells Fargo’s lawyers at Wachtell Lipton Rosen & Katz were all ready to move onto the next stage. Then in the final 60 seconds of the ban they learned that the standstill will last at least until this Friday (10 October).
“They waited until the very last minute,” said an inside source. “People were ready to run to the court room and push the button at 11.59am. But they had to extend it because nothing had been worked out.”
Citigroup, which had agreed a takeover of Wachovia before Wells Fargo stepped in, filed its law suit last weekend, claiming Wachovia had breached an exclusivity agreement by accepting Wells Fargo’s much higher $15bn bid. Since then, the two financial institutions have been banned from proceeding with any litigation relating to the fate of Wachovia.
“Any litigation is highly disruptive in the current climate,” added the source. “It prevents a solution being reached.”
While Friday is tipped to be the day the ban will be lifted, it is highly likely the battle for Wachovia will not be solved by the end of the working week.
“It would not be a surprise to see this continue over the weekend,” the mole commented.
PS: The loan market turmoil has parties scrambling to re-read the boilerplate, says the LSTA’s Bridget Marsh
Latest credit crisis news
– 08-Oct-2008 City firms win roles on Government’s bank bailout
– 08-Oct-2008 Citi and Wells Fargo battle for Wachovia
– 08-Oct-2008 UK firms line up for Icelandic bank roles
– 07-Oct-2008 City firms move to safeguard client accounts
– 29-Sep-2008 Freshfields partner to head Bank of England legal team
– 29-Sep-2008 Firms set up financial crisis response groups
– 29-Sep-2008 Stibbe lands Fortis govenment role
– 29-Sep-2008 Davis Polk, Skadden, Sullivan in Citi’s Wachovia buy
– 29-Sep-2008 City trio bag roles on Bradford & Bingley rescue
– 26-Sep-2008 Sullivan’s Cohen grabs role on WaMu’s demise
– 26-Sep-2008 Freshfields joins Nomura deal
– 25-Sep-2008 Linklaters expands PwC team stateside
– 25-Sep-2008 Linklaters, Cleary Gottlieb get fourth Wall St mandates
– 24-Sep-2008 Sullivan and Munger Tolles step up for Buffett Goldman deal
– 24-Sep-2008 Simmons scores first Lehman hedge fund claim
– 23-Sep-2008 Cleary, Ropes & Gray on latest Lehman sale
– 23-Sep-2008 Ashurst advises CarVal on Lehman’s £100m salary lifeline
– 23-Sep-2008 Skadden Arps gets Nomura mandate in Lehman Asia buyout
Previous Wall St woes
– 01-Oct-2008 Shock and awe
There was still hope on Wall St yesterday that the US government’s $700bn financial sector bailout would eventually make it through the House of Representatives. The expectation is that a revised plan will be adopted, one way or another.
– 30-Sep-2008: Byrne in the USA
And then there were more. The Linklaters team advising PricewaterhouseCoopers on Lehman Brothers’ bankruptcy just keeps on growing. As revealed last week, the firm has already put a mega 20-partner, 60-associate team on the matter in London. Now the magic circle firm is pulling out the stops on this side of the Atlantic…
– 25-Sep-2008: Foul-weather friends
Sullivan Cromwell chairman Rodgin Cohen has deservedly garnered headline after headline in recent weeks. With almost four decades of experience, Cohen has won roles on deals that have kept him – and his firm – firmly at the centre of dealing with the US financial turbulence….
– 19-Sep-2008: The Queen’s City
There may be a financial crisis on Wall St, but there are new opportunities aplenty in North Carolina. In Charlotte, America’s second biggest financial centre and the home of both Bank of America and Wachovia, a whole bunch of firms are unnervingly upbeat while Wall Street collapses….
– 18-Sep-2008: The heat and the cool
It isn’t just financial institutions that are feeling the heat on Wall Street this week. The collapse of Lehman, the acquisition of Merrill Lynch and the effective nationalisation of AIG has left dozens of lawyers facing life without their once lucrative client relationships…
– 17-Sep-2008: A&O emerges
Day three of the Wall Street crisis, and the major legal players are emerging. As my colleague Julia Berris in New York noted yesterday, Wachtell and Weil Gotshal have snagged some of the biggest roles on the US end…
– 15-Sep-2008: The Lehman fallout
Oh, the ups and downs of finance lawyers. Three months ago Linklaters’ banking group was filled with gloom after JPMorgan dumped it from every mandate you’ve ever heard of…