Banks in Clear Channel case ask for stay of trial

NEW YORK (Reuters) - The banks being sued in the dispute over the $20 billion Clear Channel Communications Inc (CCU.N) leveraged buyout asked the Supreme Court of Texas to stay all proceedings in a trial court there, according to court documents.

The banks asked for a stay until the top state court has a chance to review and rule on the banks' petition to throw out the case against them, according to the documents, obtained by Reuters on Friday. The banks requested that the court grant a stay by Tuesday morning.

Clear Channel and its private equity buyers opposed the motion, saying any stay would be "exceedingly harmful" to them, according to court documents.

Private equity firms Thomas H. Lee and Bain Capital filed complaints in New York and Texas against the banks -- Citigroup Inc (C.N), Morgan Stanley (MS.N), Credit Suisse Group (CSGN.VX), Royal Bank of Scotland Group Plc (RBS.L), Deutsche Bank AG (DBKGn.DE) and Wachovia Corp WB.N -- to force them to fund the $20 billion buyout of Clear Channel. Clear Channel joined them in the Texas suit but was not a plaintiff in the New York case.

Bexar County Judge Joe Brown Jr. has set a June 2 trial in Texas while Justice Helen Freedman has set a trial in New York Supreme Court of May 5.

The banks argue in the filing that they are confronted with trials in New York and Texas less than four weeks apart. "This is precisely the type of "harassment -- subjecting defendants to multiple lawsuits in different forums concerning the same contract -- that this court has routinely condemned ...," the filing read.

In the Texas case, Clear Channel, THL and Bain claim "tortious interference" with the deal, which "if allowed to continue and succeed, could result in immeasurable damages" exceeding $26 billion, according to the suit.

In New York, the private equity firms are seeking "specific performance" of a commitment letter that details the plans to fund the deal. Under specific performance, one party asks a judge to order another party to stick to a contract.

The banks argue they had not yet agreed to a number of financing issues with the private equity firms when they were sued.

(Reporting by Paritosh Bansal, additional reporting by Megan Davies, editing by John Wallace and Gerald E. McCormick)