Credit Suisse is turning up the legal heat on Softbank in an effort to claw back hundreds of millions of dollars in the Greensill debacle.

Attorneys for Credit Suisse applied to a high court in England last week for permission to start formal legal proceedings against Japan's Softbank, according to a «Financial Times» story (behind paywall) citing three people with knowledge of the matter.

At issue are $440 million in client funds from Credit Suisse that Greensill Capital lent to a US construction firm that filed for bankruptcy with over $1 billion in liabilities. The US firm Katerra had been backed by Softbank's $100 billion Vision Fund, according to the «FT».

In June of last year, Credit Suisse was forced to close several supply-chain finance funds after Greensill imploded which trapped $10 billion in Credit Suisse client funds. The Swiss bank is still attempting to claw back $2.5 billion in a process that could take five years, and cost $291 million Credit Suisse said.

In 2020, Softbank agreed to inject cash into Greensill which lent Katerra funds originally borrowed from Credit Suisse clients. Greensill agreed to write off Katerra's debt for a stake in the company, which filed for bankruptcy in June of last year. In US court filings the Swiss bank alleges that Softbank undertook a financial restructuring of Katerra for its benefit at the expense of Credit Suisse

Fishing Expedition

 According to the «Financial Times» report, Credit Suisse needed to get approval from a UK judge to start legal proceedings against Softbank since the clients' money was lent by Greensill rather than the bank. A decision on whether the case can proceed won't come for several months.

For its part, Softbank attorneys said Credit Suisse's efforts to get information via courts in the US is a «fishing expedition». They argue the bank has no serious intention of initiating proceedings in London but was rather an attempt to draw attention away from the poor investment decisions it made.

In June, a judge in California gave Credit Suisse an August 12 deadline to indicate that it was indeed serious about initiating a legal claim in the US. 

And here we are.