Argentina markets give back gains after U.S. court stay

By Jorge Otaola and Walter Bianchi

BUENOS AIRES | Fri Aug 23, 2013 4:10pm EDT

BUENOS AIRES (Reuters) - Argentine markets initially rose on Friday after a U.S. appeals court put a hold on injunctions against the government in its legal battle with "holdout" bond investors, but stock and bond price gains were soon erased as concerns over the case persist.

The South American grains-exporting country lost its appeal of a judge's order requiring it to pay $1.33 billion to bondholders who refused to take part in two debt restructurings.

But the 2nd U.S. Circuit Court of Appeals in New York delayed implementing the decision pending a ruling by the U.S. Supreme Court, sparking a brief market rally in Buenos Aires.

"After the appeals court decision was analyzed, the realization set in that Argentina has only bought itself some time," a local stock broker told Reuters, asking not to be named. "So sellers started showing up to take profits."

The U.S. high court is likely to consider whether to hear the case in the fall. If the justices agree to hear the case, a ruling would be issued by the end of June.

"All this does is extend the fight to next year," said Rodolfo Rossi, an economist and former central bank president.

The MerVal .MERV blue-chip stock index ended the day 0.7 percent lower at 3,916.8 points after rising 1.53 percent earlier in the session.

The case still threatens to push Argentina toward a debt default if the country is finally ordered to pay holdouts the 100 cents on the dollar that they are demanding.

President Cristina Fernandez vows never to pay on those terms. She characterizes the holdouts as "vultures" out to profit on her country's catastrophic 2002 bond default.

The holdouts bought their Argentine bonds at steep discounts, refused to restructure the obligations and are demanding repayment at face value.

The international bond market seesawed on news of the appeals court decision, with Argentina's country risk premium initially tightening by 21 basis points and then widening by 43 basis points to 1,066 basis points over comparable U.S. Treasuries, according to JP Morgan's Emerging Markets Bond Index Plus.

The index as a whole was at a much tighter spread of 357 basis points over safe-haven U.S. Treasury paper, showing the market sees Argentina three times as likely as other emerging market countries to default.

If final judgment goes against Argentina and the government nevertheless refuses to pay the holdouts what they want, the courts could block it from paying holders who accepted big writedowns as part of debt restructurings in 2005 and 2010.

Missing interest payments to the holders of restructured bonds would put the country in technical default.

"The appeals court decision means the Argentine government can continue paying bondholders who participated in the restructurings at least until there is a final decision," said Ignacio Labaqui, who analyzes the country for emerging markets consultancy Medley Global Advisors.

The ruling nonetheless marked a potential victory over the long term for holdouts led by NML Capital Ltd, a unit of billionaire hedge fund manager Paul Singer's Elliott Management Corp, and Aurelius Capital Management.

U.S. Circuit Judge Barrington Parker, writing for the three-judge panel, said the court believed "it is equitable for one creditor to receive what it bargained for, and is therefore entitled to, even if other creditors, when receiving what they bargained for, do not receive the same thing."

(Additional reporting by Brad Haynes and Alejandro Lifschitz, writing by Hugh Bronstein; editing by Dan Grebler, Kenneth Barry and Andrew Hay)

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AMR urges court to back restructuring despite antitrust suit

An American Airlines passenger jet glides in under the moon as it lands at LaGuardia airport in New YorkNew York, August 28, 2012.

Credit: Reuters/Eduardo Munoz

By Nick Brown

NEW YORK | Fri Aug 23, 2013 4:43pm EDT

NEW YORK (Reuters) - American Airlines and its creditors' committee on Friday urged a bankruptcy judge to approve the airline's restructuring plan despite an antitrust challenge from the Department of Justice.

In court papers filed in U.S. Bankruptcy Court in Manhattan, American's bankrupt parent, AMR Corp (AAMRQ.PK), said failing to approve the restructuring would add "a destabilizing factor" to its proposal to merge with US Airways Group (LCC.N) and pay back creditors.

AMR's creditors' committee, in a separate filing, said refusal by Judge Sean Lane to give the plan his blessing could threaten creditor support for the plan, which includes AMR's unions and most of its creditors.

"While the DOJ enforcement action has unsettled creditor and stockholder expectations, deferring entry of the confirmation order ... would only exacerbate this uncertainty," the committee said.

The U.S. government also filed a brief on Friday, but did not, as might have been expected, urge Lane to not approve the restructuring plan. Instead the government, through U.S. Attorney Preet Bharara, said it took "no position as to whether" Lane should confirm the plan, but cited the "attendant risk that a confirmed plan may not be able to become effective for a considerable time, if at all."

AMR and US Airways agreed to merge in February in an $11 billion deal that would end AMR's bankruptcy and create the world's largest airline. Experts had expected the deal to enjoy a smooth ride through the regulatory process.

But on August 13, two days before the restructuring plan was to gain final court approval, the DOJ sought to block it, filing a lawsuit in Washington, D.C., alleging a stifling of competition that would harm consumers though higher fares.

Judge Lane, overseeing AMR's bankruptcy in New York, held off confirming the plan in the face of the DOJ's lawsuit, giving the parties until Friday to brief him on the best course of action.

AMR, in its court papers, stressed that the merger agreement, which Lane already approved, contains "a mechanism" to account for this very scenario. If the parties cannot obtain regulatory approval, the deal would eventually be terminated, AMR said.

Lane voiced hesitation to rubber-stamp a deal that might later change due to a settlement with the DOJ. But AMR said future changes to the plan, namely divestitures, are expressly required to go back before Lane for approval.

The creditors' committee said Lane's job is to make sure the plan meets standards under the bankruptcy law. Worrying about antitrust concerns is the DOJ's job.

"They are separate processes, before different courts, and on different schedules," the committee said.

If the Justice Department ultimately succeeds in blocking the merger, it would put AMR's restructuring back at square one, requiring it to forge new strategies for paying back creditors.

AMR shareholders, who stand to receive a 3.5 percent stake in the new entity under the merger, would likely be wiped out under any plan that excludes a merger, restructuring experts have said.

AMR's unions also support a merger. The Transport Workers Union, representing ground crew members, on Thursday filed court papers urging Lane to approve the deal.

But not everyone is in favor of Lane signing off. A group of plaintiffs in a separate antitrust lawsuit against US Airways filed a brief on Thursday in AMR's bankruptcy, saying the judge cannot under bankruptcy law confirm a plan that may prove not to be feasible. AMR appears "unable to articulate a ‘Plan B' which would resolve" antitrust risks, the group said in its filing.

Regardless of Lane's decision, the issue will come down to the sides' ability to resolve matters with the DOJ. Chapter 11 merger plans require both bankruptcy court approval and regulatory approval, and one does not impact the other.

At a hearing last week, Lane did not seem opposed to the restructuring plan on its face, his hesitation instead rooted in concerns that the deal he was being asked to approve might look different a few months down the road.

The DOJ antitrust suit will take months to resolve, and possibly longer if it goes to trial.

(Reporting by Nick Brown; Editing by Tim Dobbyn)

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Argentina markets give back gains after U.S. court stay

By Jorge Otaola and Walter Bianchi

BUENOS AIRES | Fri Aug 23, 2013 4:10pm EDT

BUENOS AIRES (Reuters) - Argentine markets initially rose on Friday after a U.S. appeals court put a hold on injunctions against the government in its legal battle with "holdout" bond investors, but stock and bond price gains were soon erased as concerns over the case persist.

The South American grains-exporting country lost its appeal of a judge's order requiring it to pay $1.33 billion to bondholders who refused to take part in two debt restructurings.

But the 2nd U.S. Circuit Court of Appeals in New York delayed implementing the decision pending a ruling by the U.S. Supreme Court, sparking a brief market rally in Buenos Aires.

"After the appeals court decision was analyzed, the realization set in that Argentina has only bought itself some time," a local stock broker told Reuters, asking not to be named. "So sellers started showing up to take profits."

The U.S. high court is likely to consider whether to hear the case in the fall. If the justices agree to hear the case, a ruling would be issued by the end of June.

"All this does is extend the fight to next year," said Rodolfo Rossi, an economist and former central bank president.

The MerVal .MERV blue-chip stock index ended the day 0.7 percent lower at 3,916.8 points after rising 1.53 percent earlier in the session.

The case still threatens to push Argentina toward a debt default if the country is finally ordered to pay holdouts the 100 cents on the dollar that they are demanding.

President Cristina Fernandez vows never to pay on those terms. She characterizes the holdouts as "vultures" out to profit on her country's catastrophic 2002 bond default.

The holdouts bought their Argentine bonds at steep discounts, refused to restructure the obligations and are demanding repayment at face value.

The international bond market seesawed on news of the appeals court decision, with Argentina's country risk premium initially tightening by 21 basis points and then widening by 43 basis points to 1,066 basis points over comparable U.S. Treasuries, according to JP Morgan's Emerging Markets Bond Index Plus.

The index as a whole was at a much tighter spread of 357 basis points over safe-haven U.S. Treasury paper, showing the market sees Argentina three times as likely as other emerging market countries to default.

If final judgment goes against Argentina and the government nevertheless refuses to pay the holdouts what they want, the courts could block it from paying holders who accepted big writedowns as part of debt restructurings in 2005 and 2010.

Missing interest payments to the holders of restructured bonds would put the country in technical default.

"The appeals court decision means the Argentine government can continue paying bondholders who participated in the restructurings at least until there is a final decision," said Ignacio Labaqui, who analyzes the country for emerging markets consultancy Medley Global Advisors.

The ruling nonetheless marked a potential victory over the long term for holdouts led by NML Capital Ltd, a unit of billionaire hedge fund manager Paul Singer's Elliott Management Corp, and Aurelius Capital Management.

U.S. Circuit Judge Barrington Parker, writing for the three-judge panel, said the court believed "it is equitable for one creditor to receive what it bargained for, and is therefore entitled to, even if other creditors, when receiving what they bargained for, do not receive the same thing."

(Additional reporting by Brad Haynes and Alejandro Lifschitz, writing by Hugh Bronstein; editing by Dan Grebler, Kenneth Barry and Andrew Hay)

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AMR urges court to back restructuring despite antitrust suit

An American Airlines passenger jet glides in under the moon as it lands at LaGuardia airport in New YorkNew York, August 28, 2012.

Credit: Reuters/Eduardo Munoz

By Nick Brown

NEW YORK | Fri Aug 23, 2013 4:43pm EDT

NEW YORK (Reuters) - American Airlines and its creditors' committee on Friday urged a bankruptcy judge to approve the airline's restructuring plan despite an antitrust challenge from the Department of Justice.

In court papers filed in U.S. Bankruptcy Court in Manhattan, American's bankrupt parent, AMR Corp (AAMRQ.PK), said failing to approve the restructuring would add "a destabilizing factor" to its proposal to merge with US Airways Group (LCC.N) and pay back creditors.

AMR's creditors' committee, in a separate filing, said refusal by Judge Sean Lane to give the plan his blessing could threaten creditor support for the plan, which includes AMR's unions and most of its creditors.

"While the DOJ enforcement action has unsettled creditor and stockholder expectations, deferring entry of the confirmation order ... would only exacerbate this uncertainty," the committee said.

The U.S. government also filed a brief on Friday, but did not, as might have been expected, urge Lane to not approve the restructuring plan. Instead the government, through U.S. Attorney Preet Bharara, said it took "no position as to whether" Lane should confirm the plan, but cited the "attendant risk that a confirmed plan may not be able to become effective for a considerable time, if at all."

AMR and US Airways agreed to merge in February in an $11 billion deal that would end AMR's bankruptcy and create the world's largest airline. Experts had expected the deal to enjoy a smooth ride through the regulatory process.

But on August 13, two days before the restructuring plan was to gain final court approval, the DOJ sought to block it, filing a lawsuit in Washington, D.C., alleging a stifling of competition that would harm consumers though higher fares.

Judge Lane, overseeing AMR's bankruptcy in New York, held off confirming the plan in the face of the DOJ's lawsuit, giving the parties until Friday to brief him on the best course of action.

AMR, in its court papers, stressed that the merger agreement, which Lane already approved, contains "a mechanism" to account for this very scenario. If the parties cannot obtain regulatory approval, the deal would eventually be terminated, AMR said.

Lane voiced hesitation to rubber-stamp a deal that might later change due to a settlement with the DOJ. But AMR said future changes to the plan, namely divestitures, are expressly required to go back before Lane for approval.

The creditors' committee said Lane's job is to make sure the plan meets standards under the bankruptcy law. Worrying about antitrust concerns is the DOJ's job.

"They are separate processes, before different courts, and on different schedules," the committee said.

If the Justice Department ultimately succeeds in blocking the merger, it would put AMR's restructuring back at square one, requiring it to forge new strategies for paying back creditors.

AMR shareholders, who stand to receive a 3.5 percent stake in the new entity under the merger, would likely be wiped out under any plan that excludes a merger, restructuring experts have said.

AMR's unions also support a merger. The Transport Workers Union, representing ground crew members, on Thursday filed court papers urging Lane to approve the deal.

But not everyone is in favor of Lane signing off. A group of plaintiffs in a separate antitrust lawsuit against US Airways filed a brief on Thursday in AMR's bankruptcy, saying the judge cannot under bankruptcy law confirm a plan that may prove not to be feasible. AMR appears "unable to articulate a ‘Plan B' which would resolve" antitrust risks, the group said in its filing.

Regardless of Lane's decision, the issue will come down to the sides' ability to resolve matters with the DOJ. Chapter 11 merger plans require both bankruptcy court approval and regulatory approval, and one does not impact the other.

At a hearing last week, Lane did not seem opposed to the restructuring plan on its face, his hesitation instead rooted in concerns that the deal he was being asked to approve might look different a few months down the road.

The DOJ antitrust suit will take months to resolve, and possibly longer if it goes to trial.

(Reporting by Nick Brown; Editing by Tim Dobbyn)

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Argentina markets give back gains after U.S. court stay

By Jorge Otaola and Walter Bianchi

BUENOS AIRES | Fri Aug 23, 2013 4:10pm EDT

BUENOS AIRES (Reuters) - Argentine markets initially rose on Friday after a U.S. appeals court put a hold on injunctions against the government in its legal battle with "holdout" bond investors, but stock and bond price gains were soon erased as concerns over the case persist.

The South American grains-exporting country lost its appeal of a judge's order requiring it to pay $1.33 billion to bondholders who refused to take part in two debt restructurings.

But the 2nd U.S. Circuit Court of Appeals in New York delayed implementing the decision pending a ruling by the U.S. Supreme Court, sparking a brief market rally in Buenos Aires.

"After the appeals court decision was analyzed, the realization set in that Argentina has only bought itself some time," a local stock broker told Reuters, asking not to be named. "So sellers started showing up to take profits."

The U.S. high court is likely to consider whether to hear the case in the fall. If the justices agree to hear the case, a ruling would be issued by the end of June.

"All this does is extend the fight to next year," said Rodolfo Rossi, an economist and former central bank president.

The MerVal .MERV blue-chip stock index ended the day 0.7 percent lower at 3,916.8 points after rising 1.53 percent earlier in the session.

The case still threatens to push Argentina toward a debt default if the country is finally ordered to pay holdouts the 100 cents on the dollar that they are demanding.

President Cristina Fernandez vows never to pay on those terms. She characterizes the holdouts as "vultures" out to profit on her country's catastrophic 2002 bond default.

The holdouts bought their Argentine bonds at steep discounts, refused to restructure the obligations and are demanding repayment at face value.

The international bond market seesawed on news of the appeals court decision, with Argentina's country risk premium initially tightening by 21 basis points and then widening by 43 basis points to 1,066 basis points over comparable U.S. Treasuries, according to JP Morgan's Emerging Markets Bond Index Plus.

The index as a whole was at a much tighter spread of 357 basis points over safe-haven U.S. Treasury paper, showing the market sees Argentina three times as likely as other emerging market countries to default.

If final judgment goes against Argentina and the government nevertheless refuses to pay the holdouts what they want, the courts could block it from paying holders who accepted big writedowns as part of debt restructurings in 2005 and 2010.

Missing interest payments to the holders of restructured bonds would put the country in technical default.

"The appeals court decision means the Argentine government can continue paying bondholders who participated in the restructurings at least until there is a final decision," said Ignacio Labaqui, who analyzes the country for emerging markets consultancy Medley Global Advisors.

The ruling nonetheless marked a potential victory over the long term for holdouts led by NML Capital Ltd, a unit of billionaire hedge fund manager Paul Singer's Elliott Management Corp, and Aurelius Capital Management.

U.S. Circuit Judge Barrington Parker, writing for the three-judge panel, said the court believed "it is equitable for one creditor to receive what it bargained for, and is therefore entitled to, even if other creditors, when receiving what they bargained for, do not receive the same thing."

(Additional reporting by Brad Haynes and Alejandro Lifschitz, writing by Hugh Bronstein; editing by Dan Grebler, Kenneth Barry and Andrew Hay)

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Apple, Samsung do not have to disclose profit details -court

By Dan Levine

Fri Aug 23, 2013 11:26pm BST

n">(Reuters) - Apple Inc and Samsung Electronics Co Ltd do not have to make public the financial details submitted to a U.S. court during high-profile patent litigation, a federal appeals panel ruled on Friday.

The Federal U.S. Circuit Court of Appeals in Washington reversed a lower court ruling that ordered the two companies to disclose portions of documents that contain profit and sales information.

"We recognize the importance of protecting the public's interest in judicial proceedings and of facilitating its understanding of those proceedings," the three-judge appeals panel decided. "That interest, however, does not extend to mere curiosity about the parties' confidential information where that information is not central to a decision on the merits."

Representatives for Apple and Samsung declined to comment.

Peter Scheer, executive director of the First Amendment Coalition - an advocacy group that argued in the appeals court to have the information disclosed - said he was disappointed in the outcome for the Apple/Samsung case.

However, Scheer said the ruling is not all bad for public access to court records. For instance, the ruling says companies cannot keep information secret in court merely by calling it a trade secret, and judges must scrutinize those secrecy requests, Scheer said.

"If all the cases that come after this one adhere loosely to the legal requirements articulated in this decision," Scheer said, "then those trials will be infinitely more open and transparent than otherwise would have been the case."

Apple and Samsung have been waging patent litigation across the globe since 2011, climaxing in a high-profile trial last year in San Jose, California. A jury awarded Apple over $1 billion, but U.S. District Judge Lucy Koh later slashed the award and ordered a retrial on some of the damages.

In the run-up to trial last year, attorneys for both sides submitted several documents to the court that contained financial details in order to calculate damages. The details were redacted, and Reuters filed motions in the court to unseal the documents.

Koh ruled against Apple and Samsung, saying the public's interest in understanding the proceedings outweighed the companies' rights to keep the information secret. However, the appeals court unanimously disagreed.

"While protecting the public's interest in access to the courts, we must remain mindful of the parties' right to access those same courts upon terms which will not unduly harm their competitive interest," Judge Sharon Prost wrote.

The case in the Federal Circuit is Apple Inc vs. Samsung Electronics Co Ltd et al., 12-1600.

(Reporting by Dan Levine in San Francisco; Editing by Jeffrey Benkoe and Ken Wills)

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French court delays Daimler sales ban decision to Tuesday

A emergency exit sign is pictured above a logo of German car manufacturer Daimler AG, before the annual news conference in Stuttgart in this February 18, 2010 file photo.

Credit: Reuters/Johannes Eisele

PARIS | Fri Aug 23, 2013 6:31am EDT

PARIS (Reuters) - France's top administrative court said it would delay until Tuesday a decision on Daimler's (DAIGn.DE) request for an injunction lifting a ban on the sale of certain Mercedes Benz cars in France.

France has held up the sale of thousands of new Mercedes Benz cars because of a spat over Daimler's failure to switch to a new, more environmentally friendly coolant fluid. Daimler has argued that the new refrigerant, known as R1234yf, poses a potential fire hazard.

"The stakes are big," Jacques-Henri Stahl, president of the tribunal judging the case at the Council of State, told lawyers for France and the German company during a two hour hearing on Friday. "We're at the heart of overlapping national and European issues."

A lawyer for Daimler, Denis Garreau, said the ban affected 60 percent of the company's sales in France.

"No other (EU) member state has taken the measures that France has taken," he said, calling it a "brutal decision" to suspend sales. "Daimler's position has been jeopardized in France."

France has argued that the ban is legally permissible under an EU law that protects the environment and public health.

(Reporting by Alexandria Sage; Writing by Christian Plumb; Editing by Catherine Bremer)

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U.S. appeals court will not intervene in FHFA lawsuits vs. banks

By Nate Raymond

NEW YORK | Fri Jul 19, 2013 5:31pm EDT

NEW YORK (Reuters) - Fourteen major banks sued by the Federal Housing Finance Agency over soured mortgage investments have lost a bid to have a U.S. appeals court intervene in their cases based on what they called a judge's "gravely prejudicial" rulings.

In a brief order on Friday, the 2nd U.S. Circuit Court of Appeals in New York denied the banks' petition, saying they had not demonstrated they "lack an adequate, alternative means of obtaining the relief they seek."

The banks had jointly in March filed what is called a mandamus petition, complaining that U.S. District Judge Denise Cote in Manhattan had systematically deprived them of evidence needed to fight the FHFA's lawsuits.

The banks, which include UBS AG (UBSN.VX), JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N), also said the judge had issued rulings that sought to force them to settle.

The banks asked the 2nd Circuit to reverse rulings by Cote and allow them to gain more access to information about Fannie Mae and Freddie Mac.

The FHFA regulates Fannie and Freddie after the two mortgage finance companies were placed into federal conservatorship at the height of the 2008 financial crisis.

The filing, unusual in its targeted critique of a federal judge, was a sign of how serious the litigation had become for the banks.

The FHFA sued 18 banks in 2011, accusing them of violating securities laws by misleading Fannie and Freddie about $200 billion in mortgage-backed securities they purchased.

Sixteen of those lawsuits were transferred in December 2011 to Cote, a former federal prosecutor who recently ruled against Apple Inc in an antitrust case over ebooks brought by the U.S. Justice Department.

In the year and a half since, Cote has become a major influence in the direction of the litigation, denying motions to dismiss the lawsuits and limiting depositions and document discovery.

The banks, which also include Barclays PLC (BARC.L), Goldman Sachs Group Inc (GS.N) and Deutsche Bank AG (DBKGn.DE), in their petition to the 2nd Circuit called the judge's approach "one-sided."

"The rulings prejudge facts a jury should decide based on a full evidentiary record," the banks said.

The rulings so far have meant banks "are being forced to proceed under a series of gravely prejudicial rulings, some aimed at pressuring petitioners to settle," the petition said.

The appeals court denied the petition on Friday.

Cote has set a quick trial schedule. UBS is set to go to trial first, in January 2014.

Two defendants who were before Cote, General Electric Co and Citigroup Inc, have settled so far. Terms were confidential.

The mandamus petition was not the first trip for the FHFA cases to the 2nd Circuit. In April, a different appellate panel upheld Cote's decision not to dismiss the case against UBS, in a ruling that would apply to the 13 other cases remaining before her, as well as one in Connecticut.

Banks other than UBS on Monday sought permission to intervene in order to appeal the dismissal decision to the U.S. Supreme Court, citing the "substantial risk" the UBS case might settle before the high court could rule.

Other banks that were part of the mandamus petition to the 2nd Circuit were First Horizon National Corp (FHN.N), Nomura Holdings Inc (8604.T), Societe Generale, Morgan Stanley, Ally Financial Inc (ALLY_pb.N), Royal Bank of Scotland Group (RBS.L) and Credit Suisse Group AG (CSGN.VX).

Representatives for the banks and FHFA either declined comment or did not immediately respond to requests for comment.

The case is In re FHFA Coordinated Securities Litigation, 2nd U.S. Circuit Court of Appeals, No. 13-1122.

(Editing by Bob Burgdorfer)

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