Credit Suisse Additional Tier 1 (AT1) bondholders are exploring possible legal action following the state-backed rescue by UBS which wiped out AT1 bonds according to Quinn Emanuel Urquhart & Sullivan law firm. Under the merger between UBS and Credit Suisse, shareholders, who rank lower than bondholders in terms of who gets paid following a collapse, will receive $3.23 billion while AT1 bondholders get nothing. Due to Switzerland’s bonds’ terms, in a restructuring the financial watchdog is not obligated to adhere to traditional capital structure hierarchy, which is why AT1 bondholders lost out on $17 billion. Quinn Emanuel said a call for bondholders will likely be held on Wednesday, March 22.
