Credit Suisse Must Pay Highland $121 Million Over Las Vegas Deal

Credit Suisse Group AG must pay Highland Capital Management $121 million for a failed 2007 Las Vegas real estate deal, a Texas state court ruled.

The ruling follows a decision by the Texas Supreme Court in April 2020 throwing out $287.5 million in damages awarded to Credit Suisse by a Dallas trial judge and ordering the court to recalculate the $40 million awarded by a jury. The jury found that the bank had inflated the appraisal used to finance a golf development ahead of the 2008 housing crash.

The high court instructed the trial court judge to determine issues relating to prejudgment interest, how to credit money already received in separate settlements and damages for one of Highland’s claims. The $40 million award swelled to $121 million because of interests and costs, but also reflected a reduction for some money Credit Suisse had paid in settlements.

Highland, a Dallas-based alternative investment management firm, invested $250 million in the $560 million recapitalization loan Credit Suisse assembled for Lake Las Vegas, a struggling luxury desert golf development. The lenders lost almost all of their investment after the borrower defaulted and the collateral’s value plunged.

Judge Dale Tillery in Dallas issued the judgment Friday in favor of Claymore Holdings, an affiliate of NexPoint Advisors and Highland.

“Credit Suisse respectfully disagrees with the decision of the Texas trial court and believes that we have strong grounds for appeal,” spokeswoman Candice Sun said in a statement. “It is important to note that until this case is fully and finally resolved through the courts, there is no payment due to Highland Capital from Credit Suisse.”

After the jurors’ finding on some of the claims, the trial judge decided the rest of the case without a jury and ordered Credit Suisse to pay a further $211.8 million in damages and $75.6 million in interests and costs -- the $287.5 million the high court later thew out.

The case is Claymore Holdings LLC v. Credit Suisse AG, DC-13-07858, 18-0403, Texas 134th Judicial District Court, Dallas County (Dallas).

©2021 Bloomberg L.P.

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