Credit Suisse has launched legal action against SoftBank in an effort to recoup hundreds of millions of dollars it claims it is owed by the Japanese investor, marking a further deterioration in a relationship that has grown increasingly acrimonious following the collapse of Greensill Capital. </p>
The lawsuit relates to $440m in funds that were owed to the Swiss bank’s wealthy customers by Katerra, a US construction company. Katerra, which was funded by SoftBank’s Vision Fund and was a client of Greensill, filed for bankruptcy in June this year with more than $1bn in liabilities.
The company blamed its collapse in part on “the unexpected bankruptcy filing of Katerra’s former lender”. Greensill lent the company $440m, packaged up the debt, and sold it on to Credit Suisse investors as part of a dedicated suite of supply chain finance funds — bundled up invoices that Greensill marketed as low-risk investments.
Those funds ultimately swelled to more than $10bn in size before being suspended by Credit Suisse in March this year.
Late in 2020, SoftBank agreed an emergency cash injection into Greensill, which was intended to cover the debts at Katerra. But the Financial Times revealed earlier this year that the cash never reached the Credit Suisse funds.
The Swiss bank is now seeking to establish what SoftBank executives, including chair and chief executive Masayoshi Son, knew about the deal by subpoenaing documents through the US courts.
On Thursday, Credit Suisse filed a section 1782 discovery in the US, which would allow it to obtain documents and communications exchanged between SoftBank and Katerra.
In the filings, lawyers acting for Credit Suisse claim that SoftBank masterminded the financial restructuring of Katerra in late 2020, during which Greensill agreed to write off the $440m debt in exchange for an equity stake in Katerra.
“In other words, SoftBank orchestrated a deal wherein Greensill purported to give up its rights to the $440m outstanding . . . even though it was [Credit Suisse] who ultimately stood to lose by virtue of that deal. Nevertheless, no one informed [Credit Suisse] that this series of events was occurring,” according to the filing.
“No SoftBank entity was a formal party to the [deal], but there can be no question that SoftBank was aware of it,” it said. The filings detail how Jeffrey Housenbold, then a managing partner at SoftBank Investment Advisers, was on the board of Katerra.
Ultimately, Credit Suisse anticipates launching a case against SoftBank in the UK and has hired Queen’s Counsel to put together the case, according to a person with knowledge of the process.
Credit Suisse declined to comment. SoftBank did not immediately respond to request for comment.
Additional reporting by Owen Walker and Sujeet Indap
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