Credit Suisse has filed a lawsuit against SoftBank at the London High Court in pursuit of the $440mn that it believes its wealthiest customers are owed after the collapse of Greensill Capital, a specialist finance company.
Credit Suisse has launched formal legal proceedings in London, the first since it was taken over by UBS last month in a rescue agreement orchestrated by Swiss authorities.
Credit Suisse clients suffered losses of hundreds of millions after investing in Greensill-linked supply chain finance funds that were marketed by the Swiss bank as low-risk.
Losses were one of the worst scandals that Credit Suisse has experienced in recent years. They contributed to the anxiety felt by investors, clients, and counterparties. This unease led to the bank’s demise.
Credit Suisse filed its claim against SoftBank at the High Court in last week’s hearing, according to sources familiar with the case.
SoftBank stated that, “after trying to shift the blame for its poor investment decisions for more than two-years, Credit Suisse finally made a complaint — but as expected, this claim is completely without merit and it will be vigorously defended”.
The lawsuit focuses on $440mn that Katerra owes to Swiss bank customers. Katerra is a Californian company, funded by SoftBank Vision Fund. It’s also a Greensill client. Katerra received the money through the bank’s supply-chain finance funds.
SoftBank agreed to inject an emergency cash injection in Greensill late 2020. This was meant to cover Katerra’s debts. The money was never received by Credit Suisse, as reported previously.
Credit Suisse, in a separate lawsuit filed in the US against SoftBank, has claimed that the Japanese bank benefited from reorganizing Katerra’s finances at the expense and clients of the Swiss Bank.
Credit Suisse refused to comment on Wednesday on the legal action at the High Court, but stated that it continues “to maximise recovery for investors in supply chain finance funds”.
Credit Suisse has a number of unresolved cases, including the High Court case against SoftBank. Analysts estimate that the bank may face $5bn in litigation costs over the next 4 years.
UBS tried to protect its interests by negotiating a guarantee from the Swiss Government of up to SFr9bn (US$10bn), as part of their takeover of Credit Suisse.
The High Court’s claim is an increase in the Bank’slegal battle after the company requested judges in California and Arizona to force Katerra to provide documents related to an agreement that it reached with SoftBank in 2010. The bank wanted to know what SoftBank executives knew, including Masayoshi Son as chair and CEO.
Credit Suisse has recovered $7.4bn from the $10bn invested by clients in Greensill funds. However, it will take years to recover the remaining amount through court proceedings and legal claims.
Freshfields Bruckhaus Deringer is representing Credit Suisse in this case, while SoftBank hired Quinn Emanuel. This firm is preparing a suit on behalf of Credit Suisse Bondholders, who will lose their money as part of UBS’s rescue of the bank.