According to media reports, a decision in the legal dispute concerning the worthless AT1 bonds of Credit Suisse against Switzerland in New York is not expected until next year.
The damage claim filed by eight former creditors of Credit Suisse (CS) against Switzerland will be protracted. The presiding judge in New York is expected to make an initial ruling no earlier than February of next year, as reported by newspapers from «CH-Media», including the «Luzerner Zeitung», citing court documents.
The AT1 bonds of CS, also known as contingent convertibles (Cocos), were declared worthless by the Swiss Financial Market Supervisory Authority (Finma) during the takeover supported by the federal government, the Swiss National Bank, and Finma in March 2023.
Violation of Property Rights
The civil lawsuit against the Swiss Confederation was filed in June 2024 at the United States District Court for the Southern District of New York. The group of creditors is seeking compensation from Switzerland, currently estimated at around 80 million Swiss francs ($92 million). They argue that Finma's order to fully write off the AT1 bonds during CS’s collapse in the spring of 2023 was unlawful and that Switzerland violated property rights in doing so.
According to the media report, the attorney representing Switzerland as the defendant has requested an extension of the deadline, which has now been granted by District Judge Dale Ho. The first hearing, scheduled for February 5, will address fundamental questions related to the lawsuit.
Additional AT1 Lawsuits
The plaintiffs in the US are represented by the internationally recognized law firm Quinn Emanuel Urquhart & Sullivan, which also has a presence in Zurich. However, this case in New York pertains only to a small portion of the worthless AT1 bonds, totaling around 16 billion francs. The firm had already filed a complaint with the Federal Administrative Court in St. Gallen in 2023 against Finma's decision. This complaint represents both Swiss and international investors who collectively held more than 6 billion francs in CS AT1 bonds.
