Several lawsuits have been filed over the terms of last month’s emergency deal to bail out Swiss lender Credit Suisse by selling it to its larger rival UBS. The rescue of 3 billion Swiss francs ($3.4 billion), which was completed during a weekend of turmoil in the global banking sector, marked a turnaround in the long-standing practice of giving bondholders priority over shareholders in a debt restructuring. Approximately 16 billion Swiss francs of Additional Tier 1 (AT1) debt from Credit Suisse was written off to zero, as a shock to the markets. Law firms such as Quinn Emanuel Urquhart & Sullivan, Pallas Partners, and Korein Tillery, a boutique law firm specializing in complex litigation, are among those who have spoken to potential bondholders about filing claims. Shareholders are also dealing with losses. Here is a snapshot of the legal action, by jurisdiction. A group of investors representing more than 4.5 billion Swiss francs in AT1 bonds has taken the Swiss regulator to court in one of the biggest disputes in this area, their lawyers said on april 21. The case was brought before the Federal Administrative Court in Stallen, in northeastern Switzerland. The regulator, FINMA, declined to comment. * The Federal Administrative Court says it continues to receive complaints and has “far more than four” complaints. However, the court refuses to name the plaintiffs or list the complaints filed by bondholders or their attorneys. One of the first proposed class actions against Credit Suisse for allegedly making false or misleading statements predates the bailout. In a case led by shareholder Braden Turner, investors alleged on March 16 that the bank failed to disclose that there was a “significant” outflow of customers and that internal controls on financial reporting showed significant deficiencies. Credit Suisse did not comment. * A series of similar group actions have been filed. Investors in Credit Suisse in Singapore are also in talks to sue the Swiss government over the write-off of AT1 bonds on the grounds of breach of a free trade agreement, according to the Financial Times. The bondholders argue that the measure violates protections against unfair government action under the Singapore-European Free Trade Association signed with Switzerland in 2003, the paper said.
