The civil action against CS has been dismissed.
sda
A US court has dismissed Credit Suisse creditors’ claim for USD 370 million against Switzerland for the write-down of AT1 bonds in the course of the takeover by UBS.
- A US court in New York has dismissed the claim by international investors against Switzerland for the write-down of Credit Suisse AT1 bonds.
- This was based on sovereign immunity, which means that the Swiss Confederation is not subject to US jurisdiction.
- The plaintiffs consider themselves expropriated by the Finma order of March 2023, but can still appeal the ruling within 30 days.
Credit Suisse bondholders have failed in a civil action against Switzerland in the USA. The competent US District Court in New York has dismissed their claim for USD 370 million. The case concerned the write-off of so-called AT1 bonds when Credit Suisse was taken over by UBS.
The Federal Department of Finance (FDF) announced the ruling on Wednesday. The court in New York ruled on Tuesday that the Swiss Confederation was not subject to its jurisdiction in this matter due to sovereign immunity. It thus followed the arguments of the Swiss Confederation.
A group of international investors had filed the lawsuit in June 2024. The plaintiffs were defending themselves against an order issued by the Swiss Financial Market Supervisory Authority Finma on 19 March 2023 in connection with the emergency rescue of Credit Suisse by UBS, in which Finma had ordered Credit Suisse’s AT1 bonds to be written down to zero.
“By issuing this order, Switzerland unlawfully interfered with the property rights of the plaintiffs”, the group complained when filing the lawsuit. In particular, it criticized the fact that Switzerland had ignored other potential buyers.
The ruling can still be appealed
In addition, and in order to make the takeover as attractive as possible for UBS, Switzerland had wiped out Credit Suisse’s outstanding AT1 bonds amounting to around 17.3 billion dollars.
AT1 bonds are subordinated bonds that were created in the wake of the 2008 financial crisis to protect troubled banks from collapse. They are counted as part of a bank’s core capital.
The debt securities can be converted into equity and written off. On March 19, 2023, FINMA declared that an event had occurred with the public sector’s support for Credit Suisse that justified such action.
According to the FDF communiqué, investors have 30 days to appeal the ruling to the competent court of appeal.