Credit Suisse investors, who hold approx 4.5 billion of Swiss francs in bonds, they sued the Swiss regulatory authority (FINMA) following the zeroing of AT1 (Additional Tier1) bonds.
Law firm Quinn Emanuel Urquhart & Sullivan, which represents the bondholders, said the move was the first step in a battle to seek compensation for clients whose assets were expropriated during the company’s takeover of Credit Suisse. rival UBS.
Credit Suisse, bondholders challenge the Swiss Authority
This is the first lawsuit in the public domain relating to the decision of the Swiss Authority to deprive investors of approx 18 billion dollars of debt AT1 (Additional Tier 1) of Credit Suisse. We recall that the Swiss regulator FINMA (Financial Market Supervisory Authority), issued the devaluation order during the bailout negotiations. Recall that about a month ago UBS bought Credit Suisse for approx $3 billion, in a high-profile bailout orchestrated by the Swiss government and the Swiss National Bank.
“We are committed to rectifying this decision, which is not only in the interest of our clients but will also strengthen Switzerland’s position as a key jurisdiction in the global financial system,” he said. Thomas Werlenmanaging partner, Quinn Emanuel.
Il appeal against FINMAthe Swiss Financial Market Supervisory Authority, which ordered the devaluation, was presented on April 18 to the Federal Administrative Court of saint roosterin northeastern Switzerland.
FINMA, “the decision to cancel the bonds is legitimate”
FINMA said last month that the decision to write down the bonds (AT1) was legally flawless because bond prospectuses and government emergency-related legislation allowed for a full write-down in an “emergency event”.
Designed in the aftermath of the global financial crisis, AT1 bonds were designed to protect investors from the burden of risk in the event of a problem with a bank.
It must be said however that during the rescue of Credit Suisse, the Swiss authorities together with the government they overturned an established practice, that is give priority to bondholders than shareholders in debt collection. Thus opening some rather significant holes in the balance sheet of the latter.