A US fintech founded by an ex-Credit Suisse managing director is suing the Swiss bank for hundreds of millions of dollars in New York.
Neobank American Challenger is accusing Credit Suisse of failing to conclude an agreed sale of a commercial loan portfolio, leading to the termination of its merger with Patriot Bank and loss of revenue, as reported by «caymancompass» last month and picked up by «Inside Paradeplatz» (in German) Thursday.
At the heart of the court case is American Challenger’s founder Felix Scherzer, an investment banker who worked at Credit Suisse between 2015 and 2019 and was responsible for advising financial services providers on mergers and acquisitions globally.
«We view this lawsuit as one which is entirely meritless and we will defend ourselves vigorously,» Credit Suisse replied to a request for comment to finews.asia.
Largest Digital Bank
Just a year after having founded his company, Scherzer was already planning a merger with its competitor Patriot National Bancorp with the intention of creating the largest digital bank in the United States.
The transaction, which would have required a capital increase at Patriot National Bancorp's holding company, received the green light from the US regulator last June.
Yet in July, both parties issued a press statement saying that the deal was off because they had not been able to fulfill the final conditions for the merger. The failed merger deal was valued at $119 million, the claimants say.
Dealbreaker
The lawsuit alleges that Credit Suisse failed to conclude the sale of a portfolio of corporate loans worth the equivalent of $650 million that American Challenger had wanted to acquire. The corporate loans would have provided much-needed revenue to the neobank, required for its merger with Patriot National Bancorp.
According to the lawsuit, Credit Suisse justified its withdrawal by saying it had not received the internal approval for the sale, which Scherzer's lawyers say is a pretext and constitutes a breach of contract, for which they are claiming compensation.
Bermuda Blunder
This is not the first time that Credit Suisse’s island state subsidiaries are embroiled in legal battles. Last March, the bank suffered a setback in a tug-of-war with Eastern European oligarchs in Bermuda and was forced to pay damages of up to $600 million.
As American Challenger and Patriot National Bancorp announced after the collapsed deal, negotiations have resumed, although according to media reports, Scherzer does not hold out much hope that the deal can still be salvaged.
