Holders of roughly $17B in Credit Suisse Additional Tier 1 bonds are challenging FINMA’s March 2023 order that wrote their instruments down to zero as part of the emergency UBS takeover, arguing shareholders were treated better despite the usual creditor priority. The Federal Administrative Court sided with bondholders in October 2025 and annulled the order, but FINMA and UBS have appealed to the Federal Supreme Court, which has kept the write-down in effect pending its decision.
LATEST DEVELOPMENT · OCT 22, 2025
On October 1, 2025, the Federal Administrative Court annulled FINMA’s March 19, 2023 order writing down about CHF 16 billion of Credit Suisse AT1 instruments to zero, holding that the order lacked a sufficient legal basis and that the contractual trigger had not occurred. FINMA announced its appeal to the Federal Supreme Court on October 15, 2025 and UBS followed. The Supreme Court granted suspensive effect, so the bonds remain written down pending its ruling, and the Federal Administrative Court has suspended all other AT1 cases until the lead case is decided. Investor groups, including Japanese bondholders, have separately launched treaty claims against Switzerland.
BACKGROUND
In March 2023, as Credit Suisse teetered on the edge of collapse, the Swiss government engineered an emergency takeover by UBS. As part of that rescue, the Swiss Financial Market Supervisory Authority (FINMA) ordered that all of Credit Suisse’s Additional Tier 1 (AT1) capital instruments, roughly CHF 16 billion (about $17B), be written down to zero, even though Credit Suisse shareholders retained value in the UBS share-swap. That inversion of the normal insolvency hierarchy, where bondholders are usually paid before shareholders, triggered immediate outrage among AT1 investors around the world, including large institutional holders in the United States, Japan, Singapore and the Gulf.
Thousands of affected bondholders, organized into competing litigation groups by firms including Quinn Emanuel Urquhart & Sullivan and Pallas Partners LLP, filed appeals with Switzerland’s Federal Administrative Court in St. Gallen, arguing that FINMA’s order lacked legal basis and that the contractual trigger for a write-down, a capital shortfall or state aid, had not actually occurred. Roughly 3,000 complainants ultimately lodged appeals across some 360 cases, with B-2334/2023 designated the lead case. Parallel proceedings were also filed in the United States, where a group led by Quinn Emanuel sued the Swiss Confederation in the Southern District of New York seeking full compensation.
On October 1, 2025, the Federal Administrative Court ruled in favor of the bondholders, annulling FINMA’s March 19, 2023 order and finding it lacked sufficient legal grounding under the Banking Act, the Financial Market Supervision Act, and the Federal Council’s emergency ordinance. FINMA and UBS both announced appeals to the Federal Supreme Court, Switzerland’s highest court, which granted suspensive effect so that the write-down remains in place while the appeal is pending. The Federal Administrative Court suspended the roughly 359 other pending AT1 cases to await the Supreme Court’s ruling in the lead case.
Meanwhile, the US litigation route has largely closed. A New York federal court dismissed a related AT1 suit against Switzerland on sovereign immunity grounds, and press reporting indicates a federal appeals court has since upheld that immunity finding, leaving the Swiss courts as the primary forum for bondholders seeking recovery.
TIMELINE
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2026APPEALUS appeals court upholds Swiss sovereign immunity in AT1 litigationThe US Court of Appeals confirmed that Switzerland acted in its sovereign capacity when it ordered the AT1 write-down, closing off the US litigation route for affected bondholders.
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OCT 22, 2025PROCEDURALFederal Administrative Court suspends all other AT1 cases pending the Supreme Court ruling
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OCT 15, 2025APPEALFINMA announces appeal to the Federal Supreme Court
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OCT 1, 2025JUDGMENTUS federal court dismisses related $370M AT1 suit on sovereign immunity groundsA New York federal court rejected a separate AT1-related suit against Switzerland worth about $370M, finding Switzerland acted as an immune foreign sovereign in the Credit Suisse rescue.
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OCT 1, 2025JUDGMENTFederal Administrative Court annuls the FINMA write-down order in lead case B-2334/2023The court confirmed the bondholders’ standing and revoked FINMA’s decree of March 19, 2023, finding no sufficient legal basis for the write-down.
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JUN 6, 2024FILINGBondholders sue Switzerland in US federal court seeking full $17B compensationA group of Credit Suisse AT1 bondholders, represented by Quinn Emanuel Urquhart & Sullivan, filed suit against the Swiss Confederation in the US District Court for the Southern District of New York seeking full compensation for the $17B writedown.
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MAY 4, 2023FILINGQuinn Emanuel’s bondholder group grows to over 1,000 claimantsQuinn Emanuel Urquhart & Sullivan said it now represented more than 1,000 Credit Suisse AT1 bondholders holding roughly a third of the total notional value of the written-down bonds, as more investors joined the group appeal against FINMA.
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MAY 2, 2023FILINGPallas Partners files Swiss appeals on behalf of two AT1 bondholder groupsPallas Partners announced it was coordinating proceedings filed in Switzerland on behalf of two large groups of Credit Suisse AT1 holders challenging FINMA’s write-down order.
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MAR 21, 2023PROCEDURALPallas Partners and Swiss counsel begin exploring legal action for AT1 holdersDays after the write-down, law firm Pallas Partners said it and a Swiss counsel were working on possible legal action for Credit Suisse bond investors whose AT1 holdings were wiped out.
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MAR 19, 2023OTHERFINMA orders Credit Suisse to write down all AT1 instruments as part of the UBS rescue