ADVERTISEMENT

Softbank Tells U.S. Judge It Will Resist Credit Suisse Subpoena

Softbank Tells U.S. Judge It Will Resist Credit Suisse Subpoena

SoftBank Group Corp. told a judge it will resist Credit Suisse Group AG’s demand for information to lay the groundwork for a lawsuit the Zurich-based bank has said it plans to file in England stemming from the collapse of Greensill Capital.

The escalating dispute in federal court in California comes as Credit Suisse said it sent potential defendants in England a “pre-action” letter ahead of its filing of a complaint there.

The companies jointly told a San Francisco magistrate judge Thursday that the 25-page letter includes allegations relevant to Softbank’s response to a subpoena from Credit Suisse. The magistrate judge previously granted the Swiss bank’s request to serve its document demand on Softbank, but said he would entertain objections from the Japanese company to complying with it. Softbank is asking for its deadline to be extended to Feb. 18.

Credit Suisse is seeking information from board meetings at Katerra Inc., a U.S.-based construction company in which SoftBank was a major investor. The bank is trying to reclaim $2.7 billion in overdue loan payments from borrowers including Katerra. It has said it invested in about $440 million worth of notes backed by the construction company.

In a memo sent to the board of Softbank’s Vision Fund in late January, and obtained by Bloomberg News, the company’s legal department said Credit Suisse will “continue with its desperate, unwarranted attempts to blame other institutions -- including SoftBank -- for Credit Suisse’s poor investment decisions.”

The proposed suit is simply an attempt to “placate” Credit Suisse’s own investors, Softbank Vision Fund’s lawyers wrote.

The collapse of financier Lex Greensill’s supply-chain finance empire was the first of two big hits to Credit Suisse last year, with the implosion of Archegos Capital Management coming shortly afterward. 

Credit Suisse cut ties with Softbank in May, deciding to no longer do any new business with the Japanese firm, after the collapse of Greensill and amid conflict of interest allegations, people with knowledge of the decisions earlier told Bloomberg.

The Swiss bank has repaid $6.7 billion to investors in supply-chain funds affected by Greensill’s failure.

In 2020, Credit Suisse had conducted an internal review into the Greensill funds and potential conflicts of interest involving Softbank. A number of its portfolio companies received loans via supply-chain funds at Credit Suisse, while Softbank was also an investor in the Swiss lender’s funds. In the aftermath, Softbank pulled $700 million out of them and the bank also changed its investment guidelines.

The overlapping financial relationships had raised questions whether Softbank was using the Credit Suisse funds to prop up investments in the Vision Fund, including Greensill Capital, in which it had a substantial stake.

The case is In re Ex Parte Application of Credit Suisse Virtuoso, 21-mc-80308, U.S. District Court, Northern District of California (San Francisco).

©2022 Bloomberg L.P.