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U.S. District Judge Thomas Griesa said on  Thursday that notes governed by Argentine law and issued in restructurings should be considered foreign debt, making them subject to a ban on overseas bond payments until the country resolves a decade-long legal dispute with its disgruntled creditors, Bloomberg News reported yesterday. The decision is a blow to investors who had turned to the local debt after the judge’s prohibition first went into effect in June, when the nation’s failure to reach a settlement triggered its second default in 13 years. To Barclays Plc’s economist Sebastian Vargas, the risk now is that Judge Griesa may seek to extend the ban to all local-law notes, including those that weren’t issued in debt swaps. “Lots of people had expected to continue to be paid with a local law bond but what we realized is that, no — the judge can prevent payment,” Vargas said. 

U.K. insurance company Towergate Finance PLC is seeking the aid of a U.S. bankruptcy court as it works through its financial troubles in the High Court of Justice of England and Wales, Dow Jones Daily Bankruptcy Review reported today. Trouble with regulators and a streak of losses triggered concerns about the financial stability of the Towergate Group of insurance brokers last year. Negotiations with senior creditors have produced an agreed-upon restructuring plan, but Towergate fears that a dissenting investor could sue in the U.S., complicating its effort to put in place so-called schemes of arrangement in the U.K. To ward off the threat of a lawsuit in the U.S. from a dissenting investor, Towergate filed for chapter 15 protection on Friday in New York.

U.S. investment firm Huxley Capital Corp filed a lawsuit on Thursday in a New York court against Brazilian construction group OAS SA, alleging the debt-laden company is hiding assets from creditors at two valuable subsidiaries, Reuters reported yesterday. The defendants in the lawsuit, filed in Manhattan federal court, are OAS and subsidiaries Construtora OAS SA, OAS Investimentos SA, OAS Infraestrutura SA and OAS Engenharia e Construção SA, court documents showed. Huxley alleged that OAS transferred assets from Construtora OAS and OAS Investimentos to protect them from bondholders. Huxley owns debt issued by two of the subsidiaries, which he said might prove unable to make good on their obligations because of the asset transfers. The transfers occurred as OAS plunged into "disarray" after the company was named in a corruption probe in Brazil that subsequently cut access to financing, the lawsuit said.

Argentina's economy minister said yesterday that "me-too" investors who want compensation for debt owed since the country's 2002 default have lodged claims for between $7 billion and $8 billion in the hope of gaining from its legal battle with other holdouts, Reuters reported yesterday. A U.S. judge ordered Argentina in 2012 to pay a group of hedge funds that did not participate in its 2005 and 2010 debt restructuring, including Elliott Management Corp.'s NML Capital Ltd. and Aurelius Capital Management, $1.33 billion plus interest. Argentina refused to pay, calling the creditors "vulture funds" for seeking to pick clean the carcass of Latin America's third-largest economy after its devastating 2002 default on $100 billion in debt. The country now says it wants to reach a deal, after its legal battle with the holdouts pushed it into default on its restructured debt in July. But it wants to settle claims from all creditors who refused the swaps at the same time. U.S. District Judge Thomas Griesa in New York said that he would deal with "me too" claims filed by March 2 on the same schedule as those of the hedge funds. "Those who presented new claims to Griesa worth $7 or $8 billion are also vultures," Economy Minister Axel Kicillof said yesterday.

American Airlines Group Inc. and Delta Air Lines Inc. have no plans to rescue Japan's bankrupt Skymark Airlines Inc., the two companies said separately yesterday following a media report on their alleged interest in the budget carrier, Reuters reported yesterday. Nikkei Asian Review reported earlier that American intended to send executives to Japan to discuss investment in Skymark, and that a tie-up interested Delta, which lacks a Japanese partner in its SkyTeam alliance. The report came as Japan's biggest carrier, ANA Holdings Inc, and a subsidiary of Malaysia's AirAsia Bhd expressed interest in Skymark. Meanwhile, U.S. carriers are increasingly competing for passengers between East Asia and the United States.

The Canadian subsidiary of embattled for-profit education company Corinthian Colleges Inc. has filed for bankruptcy under Canada’s insolvency law after an Ontario education regulator took action against the company’s 14 Canadian campuses, the Wall Street Journal reported today. Everest Colleges Canada Inc. filed for an assignment under the Bankruptcy Insolvency Act on Friday, which is Canada’s bankruptcy law. Duff Phelps Canada Restructuring Inc. will administer the case as trustee, according to an announcement. Until recently, Corinthian’s Canadian operations had been isolated from the chaos that has embroiled the company in the U.S. since last summer. The 14 Everest campuses weren’t linked to the deal with the U.S. Department of Education that required Corinthian to sell or close all of its campuses in the U.S. Then on Feb. 19, the Ontario Ministry of Training, Colleges and Universities suspended Everest’s registration and gave notice that it intends to make that suspension permanent.