This Insight complements our earlier Tuesday analysis on the Credit Suisse / UBS merger decisions (BGer 2E_1/2024 & SDNY 2025) – together they trace the evolving jurisprudence surrounding the CS rescue and its long legal aftermath.
Introduction
Credit Suisse Group AG (“CS”) and UBS Group AG (“UBS”) long defined the Swiss financial center. After a prolonged decline, the crisis culminated in March 2023. With an emergency ruling dated 19 March 2023, FINMA instructed CS among others to write off all Additional Tier 1 (“AT1”) capital instruments. Such AT1 bonds had a nominal value of approximately CHF 16.5bn. Around 3’000 bondholders, among them parties represented by LINDEMANNLAW, have lodged appeals against this FINMA-ruling in around 360 proceedings before the Federal Administrative Court (“FAC”). After a waiting time of over 2 years, the creditors have just experienced unexpected success thanks to the partial FAC-decision dated 1 October 2025 in one model procedure, which was published on 14 October 2025.
According to this FAC-decision, the FINMA-ruling dated 19 March 2023 is to be revoked and the property rights of the creditors are to be honored. This is a huge success for the creditors as well as for the Swiss legal state and Swiss legal system. We hereby congratulate them on this huge success! Special congratulations and thanks to our clients, whom we have the honor to represent in these complicated cases!
1) What does this recent FAC-decision mean for AT1-creditors and what was decided?
This is a partial decision in a model procedure. This is a designated approach in such complicated litigation proceedings. The subject matter of this partial decision is the complainant’s request to revoke the FINMA-ruling dated 19 March 2023.
In this partial ruling, the FAC set aside FINMA’s ruling, finding (among others) that neither the Emergency Ordinance nor the instruments’ terms provided the clear legal basis required for such a severe interference with property rights. The court emphasized that CS still met minimum capital requirements on March 19, 2023, and that state support aimed at confidence and liquidity did, on the record, constitute neither a Contingency nor a Viability Event within the meaning of AT1-contractual terms.
According to the FAC, all other related procedures have been suspended, until there is a final decision with respect to the legal validity of this FINMA-ruling. FINMA has already announced an appeal to the Federal Supreme Court. [1]
2) Why is this significant?
The decision reins in crisis-time discretion: even under pressure, supervisory power requires a precise statutory and contractual trigger. The FAC’s approach underscores legal certainty as a cornerstone of market trust, while leaving remedies (reinstatement vs. compensation) for later phases and competent courts.
3) Key legal fault lines the FAC illuminated in a nutshell
Contract vs. regulation. The FAC read the AT1 prospectus language (notably the “viability” trigger tied to capital adequacy) more narrowly than FINMA’s crisis reading and closer to how investors would expect it to operate.
Emergency powers. The court viewed the Emergency Ordinance as an insufficient (and potentially over-extended) foundation where the “too-big-to-fail” framework already provided a tailored statutory path.
Standing and review. Bondholders’ property interests warranted judicial review; crisis management does not eclipse due process.
Together, these themes point to a re-benchmarking of Swiss resolution practice toward tighter textual fidelity and clearer statutory footing in future interventions. (See background reporting and court summaries.)
4) What does this mean for investors and UBS now?
UBS, as CS’s successor, sits at the intersection of benefit and burden: it gained balance-sheet relief from the 2023 write-down, yet could face compensation claims if the ruling stands. Market commentators note that even adverse outcomes are unlikely to imperil UBS’s capital strength, but the legal overhang is real and will only clear with a Federal Supreme Court decision. In the interim, trading in claims tied to the wiped-out AT1s jumped on the ruling – a market signal that perceived payout probabilities have risen, while remaining well below certainty. [3]
5) What comes next?
Appeal path. FINMA has already announced an appeal; until final, the FAC’s partial victory does not itself restore losses or award damages. [4] As Swiss damages law requires cumulative proof of:
unlawfulness,
damage (robust quantification),
causation (natural and adequate), claimants may expect courts to scrutinize loss models and event-study causality with care.
Systemic lens. Parliamentary work on the CS crisis (PUK) stressed preparedness yet exposed pressure points in oversight and capital relief – context the courts and policymakers will weigh as they calibrate future frameworks. [5]
Conclusion
Swiss courts have drawn a bright line: emergency does not suspend legality. The FAC’s ruling re-centers statutory clarity and pacta sunt servanda in bank resolution. The focus now shifts to Lausanne: the Federal Supreme Court will set the final coordinates and decide in a binding way over the legal validity of the FINMA-ruling dated 19 March 2023. For markets and institutions alike, this is a constructive reset – an opportunity to strengthen governance so that stability and legality move in lockstep. [6]
Where LINDEMANNLAW adds value
LINDEMANNLAW has an experienced and highly qualified litigation department, which is currently reviewing in detail the lengthy partial decision and its legal key points. You may expect in a timely manner a legal insight by us, analysing the partial decision in detail.
LINDEMANNLAW represents clients before all courts in Switzerland, including but not limited to the FAC and the Swiss Federal Supreme Court, and fights intensively for the rights of its clients. We build cases where evidence and law interlock – from securities and capital-markets disputes to state liability and administrative law.
Considering action?
If you possess a claim and are considering action, LINDEMANNLAW is the correct contact partner. We offer a discreet, no-obligation assessment. We’ll map opportunities, sequence the next steps, and position your claim effectively.
Disclaimer: This publication provides general information only and does not constitute legal advice. For advice on your specific situation, please contact us directly.
Source
[1] https://www.reuters.com/business/finance/finma-appeal-credit-suisse-at1-court-ruling-2025-10-16/, https://www.srf.ch/news/wirtschaft/at1-urteil-bundesverwaltungsgericht-hebt-abschreibung-der-credit-suisse-anleihen-auf, https://www.nzz.ch/wirtschaft/at1-anleihen-finma-gerichtsurteil-credit-suisse-ld.1834512
[2] https://www.srf.ch/news/wirtschaft/das-sind-die-zentralen-punkte-des-at1-urteils, https://www.parlament.ch/centers/documents/de/puk-bericht-credit-suisse-2024.pdf
[3] https://www.ft.com/content/ubs-credit-suisse-at1-compensation-2025, https://www.reuters.com/business/finance/ubs-capital-impact-credit-suisse-at1-court-2025-10-16/, https://www.bloomberg.com/news/articles/2025-10-15/credit-suisse-at1-claims-jump-after-swiss-court-decision
[4] https://www.reuters.com/business/finance/finma-confirms-appeal-credit-suisse-at1-case-2025-10-16/, https://www.parlament.ch/de/services/news/Seiten/2024/2024-12-20-puk-credit-suisse.aspx
[5] https://www.bvger.ch/bvger/de/home/medien/medienmitteilungen.html, https://www.ft.com/content/swiss-at1-ruling-emergency-powers-2025
[6] https://www.news.admin.ch/en/newnsb/MnGHBti72ClCHjs5tE7GM?utm_source
