Singapore Law Firm to Sue Switzerland Over Asia Losses on AT1s

(Bloomberg) — One of Singapore’s largest law firms will file a lawsuit against the Swiss government by the end of the year, seeking compensation for hundreds of Asian bondholder Credit Suisse AT1 debts wiped out in 2023.

Drew & Napier plans to pursue so-called investment treaty claims, first for Japanese bondholders and then for investors from Hong Kong and Singapore, according to an executive at the firm, which represents about 560 bondholders from three counties.

Mahesh Rai, who is working on the lawsuit seeking to recover nearly $300 million in losses from the Swiss government, said a Swiss court’s ruling that the write-down of Credit Suisse AT1 bonds was illegal was “the first step in righting the wrong done to our clients.”

The Swiss finance ministry declined to comment in response to a question from Bloomberg News.

The Swiss Federal Administrative Court this month sided with complainants who alleged that in March 2023, a decree was issued by UBS Group AG to write off AT1 bonds worth 16.5 billion Swiss francs ($20.8 billion) as part of a government-mediated rescue of Credit Suisse. – was illegal and had to be cancelled.

Still, investors’ hopes will be tempered by how long the legal process takes and whether any payouts are likely. The complete undervaluation of AT1 bonds had caused concern, given that shareholders typically absorb losses before bondholders.

Under bilateral investment agreements, Drew & Napier had to send trigger letters to the Swiss government and did so in December 2024 and in May this year. The firm is now launching the claim as the agreements require the parties to negotiate for a period of six months after the letters are published.

Its actions build on decades of agreements Switzerland has made with Singapore, Japan and Hong Kong. These agreements provide protection to investing individuals and companies, including safeguards against expropriation of their investments and unfair treatment by governments.

Rai said the firm was “positive about the likelihood of success” and was still signing up for affected bondholders. Omni Bridgeway Ltd., the litigation financing firm, agreed to pay the investors’ attorney fees.

–With help from Noelle Illien.

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