Credit Suisse has brought legal action against SoftBank in an attempt to recover hundreds of millions of dollars it says it owes to Japanese investors, marking a further deterioration in an increasingly acrimonious relationship. after the collapse of Greensill Capital.
The lawsuit concerns $440 million owed by Katerra, an American construction company, to wealthy Swiss bank customers. Katerra, funded by SoftBank’s Vision Fund and a customer of Greensill, filed for bankruptcy in June of this year with more than $1 billion in liabilities.
The company blamed its demise in part on the “unexpected bankruptcy filing of Katerra’s former lender”. Greensill lent the company $440 million, packaged the debt, and sold it to Credit Suisse as part of a dedicated supply chain financing fund — packing bills that Greensill markets as risky investments short.
Those funds eventually grew to more than $10 billion before being suspended by Credit Suisse in March of this year.
At the end of 2020, SoftBank agreed to pour emergency money into Greensill, to cover debts at Katerra. But the Financial Times revealed earlier this year that the cash never reached the Credit Suisse fund.
The Swiss bank is now seeking to verify what SoftBank executives, including chairman and chief executive Masayoshi Son, knew about the deal by subpoenaing documents through a US court. Ky.
On Thursday, Credit Suisse filed a discovery of section 1782 in the US that would allow it to obtain documents and communications exchanged between SoftBank and Katerra.
In the filing, lawyers representing Credit Suisse allege that SoftBank masterminded the financial restructuring of Katerra by the end of 2020, in which Greensill agreed to write off $440 million in debt in exchange for a stake in Katerra.
“In other words, SoftBank arranged an arrangement in which Greensill purportedly waives its right to $440 million in debt. . . even though it was [Credit Suisse] who ultimately succumbed to that deal. However, no one notices [Credit Suisse] that this sequence of events occurred,” according to the filing.
“No SoftBank entity is an official party to [deal], but there’s no doubt that SoftBank knew about it,” it said. The filing details how Jeffrey Housenbold, then a managing partner at SoftBank Investment Advisers, was on Katerra’s board.
Ultimately, Credit Suisse anticipates launching a lawsuit against SoftBank in the UK and has hired lawyers to settle the case, according to a person with knowledge of the process.
Credit Suisse declined to comment. SoftBank did not immediately respond to a request for comment.
Additional reporting by Owen Walker and Sujeet Indap
https://www.ft.com/content/f0a984fc-9c97-4cc9-95b0-b530bee6672d Credit Suisse sues SoftBank