15.10.2025 22:19
A significant development from Switzerland's Federal Administrative Court has reignited a contentious dispute, overturning a 2023 directive that had controversially extinguished $17 billion in Credit Suisse Additional Tier 1 (AT1) bonds. This initial decision, widely reported by various internet sources, had declared these bonds worthless as part of UBS Group AG's government-orchestrated acquisition of the ailing Credit Suisse, leaving bondholders reeling and incandescent with anger. Now, with this fresh judicial intervention, those investors are back in contention, resolutely pursuing their financial claims.
While this week's pronouncement doesn't assure instant recompense for the affected parties, it crucially invalidates the core administrative order that originally wiped out the value of these bonds. Switzerland's primary financial oversight body, Finma, has already signaled its intent to challenge the court's decision, yet the ruling has undeniably forged a fresh legal avenue that bondholders are eager to explore. Many are now drawing comparisons to the resolution of the Lehman Brothers collapse, envisioning a scenario that culminates in a full restitution of their investments.
The parallels drawn to the aftermath of Lehman Brothers' collapse are anything but coincidental for these investors. Following the global financial crisis of 2008, creditors of Lehman Brothers International Europe, its London-based subsidiary, were ultimately repaid in full, along with accrued interest, despite years of their claims being considered severely impaired. For distressed bondholders, this outcome has become a coveted benchmark, a "holy grail" in the realm of financial recovery. Two individuals with direct stakes in the extinguished Credit Suisse AT1s, speaking anonymously due to their inability to comment publicly, expressed their unwavering determination for a similar resolution, signaling a prolonged legal battle.
Ever since the forced acquisition, these particular AT1 instruments shed their designation as recognized securities. Stripped of their former status, they ceased to offer periodic interest payments, lost their investor protections, and no longer carried the legal obligations typically associated with a borrower. They had effectively been downgraded to mere "claims" and nothing more. For over two years, holders had been grappling with what appeared to be utterly defunct assets, watching their positions lie dormant on paper, until Tuesday's court decision breathed new life into their long-held hopes.
