Non-Standard Case Spotlight: Credit Suisse Bondholder Administrative Appeal
Following the March 19, 2023, decision by the Swiss Financial Market Supervisory Authority (FINMA) fully writing down their value (the Order), organizers are pursuing administrative appeals for Credit Suisse Additional Tier 1 (AT1) bondholders.
Recovery Efforts in Switzerland
On April 18, 2023, a bondholder group filed an appeal of the FINMA decision in the Swiss Federal Administrative Court in St Gallen, Switzerland. The appeal is a public law-based challenge that broadly speaking: (a) challenges the legality of the Order, and (b) claims compensation for losses suffered from the full write down.
A second group of bondholders recently filed appeals, still within the 30-day appeal period. And organizers may file a third appeal later, after the 30-day window. However, the timing for this has not yet been set and those claimants will have to overcome objections to the timeliness of their appeals.
The appeal is a pre-condition for compensation from the government on the administrative law claims. The appeals cannot be filed on a representative basis. Instead, each claimant must individually appeal. Therefore, if you want to recover on these claims, you must appeal now. If you join, your participation burdens should be light, and your involvement will be publicly anonymous.
Subsequent Recovery Efforts
Organizers are also contemplating recovery efforts in countries outside Switzerland including the US. These would most likely proceed as direct (opt-in) group actions, not class actions. The law firms have not yet specified the time frame or details for these further efforts. However, the causes of action contemplated will not require claimants to have appealed in Switzerland. So, these efforts will be open to all CS AT1 bondholders domiciled in the countries where the litigation is brought. If there is adverse cost risk in that country, you will bear it.
Other Potential Recovery Efforts
We believe at least one organizer is contemplating recovery efforts for UK bondholders that may be funded. If so, claimants will be represented on a contingent basis with prosecution costs being advanced, paying success fees and reimbursement only from any success. There should also be some degree of coverage for adverse costs.
We are happy to schedule a call for you with the head of our internal legal team to provide more information on this matter including details on the registration requirements and for future updates going forward.
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