Global litigation firm Quinn Emanuel Urquhart & Sullivan has received a mandate from Credit Suisse additional tier one (AT1) bondholders to represent their interests in the wake of the takeover by UBS.
The acquisition led to $17bn worth of AT1 debt being written off. Quinn Emanuel said the group they are representing holds a ‘significant percentage’ of the wiped out bonds.
Richard East, Quinn Emanuel senior partner, said: “We are extremely pleased to have been retained by a key AT1 bondholder group and now look forward to seeking compensation for our clients, drawing on our extensive experience in situations of this kind.”
AT1s, also known as contingent convertibles, were introduced as part of tighter rules placed on banks following the 2008 global financial crisis.
Swiss law allows for AT1s to be written down without the involvement of equity under specific conditions requiring government backing. This detail in the Swiss banking system allowed for regulators to overturn the capital hierarchy, which usually sees contingent convertibles come ahead of equity in the event of a failure, in order to wave through the deal.
“There is still a chance that the various actors will recognise and correct the mistakes made in hastily orchestrating this merger,” said Thomas Werlen, the law firm’s managing partner.
He added: “While we are certainly prepared to pursue whatever proceedings are necessary, a potential constructive engagement with the relevant stakeholders could prevent years of litigation. That will be an important focus for us over the coming weeks.”
The news comes a day after Swiss prosecutors announced an investigation into whether the $3.2bn rescue deal broke criminal law.
The Swiss attorney general’s office said on Sunday (2 April) the probe would ‘analyse and identify’ any offences that may have been committed, with a variety of aspects around the events leading up to the takeover due to be investigated.
See also: Credit Suisse CoCos wipeout creates opportunity for bond funds amid the chaos
