It was literally a last-minute intervention. At 11.59am on Wednesday 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 P Joseph Law Offices and Wells Fargo’s lawyers at Wachtell Lipton Rosen & Katz were all ready to move on to the next stage – the actual litigation. Then, in the final 60 seconds of the ban, they learnt that the standstill would last at least until Friday (10 October).
“They waited until the very last minute,” said an inside source. “People were ready to run to the courtroom and push the button at 11.59am. But they had to extend it because nothing had been worked out.”
At the time of going to press, the lawyers on the dispute were all poised for action. For Citi Greg Joseph, name partner at Gregory P Joseph Law Offices, was on standby after Wachovia’s lawyers, Boies Schiller partners David Boies and George Frampton, filed a complaint against Citi.
Wells Fargo brought in Friedman Kaplan Seiler & Adelman partner Eric Seiler to advise on the dispute.
In its lawsuit, Citigroup – which had agreed a $2.2bn (£1.26bn) takeover of Wachovia before Wells Fargo stepped in – claimed Wachovia had breached an exclusivity agreement by accepting Wells Fargo’s much higher $15bn (£8.7bn) 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.”
Although Citi withdrew its bid for Wachovia on Friday, paving the way for Wells Fargo’s takeover, the bank will press ahead with legal action.