As part of a series of groundbreaking international lawsuits, Asian investors are now participating in legal action against the Swiss government for its management of the acquisition of the distressed bank, Credit Suisse.

In March, Credit Suisse was compelled by Swiss authorities to merge with its larger rival UBS due to concerns of possible collapse, resulting in $17 billion (£13.5 billion) worth of bonds held by investors becoming worthless. "It all fell apart so rapidly," revealed a bondholder based in Singapore.

Despite Credit Suisse facing a series of scandals and compliance issues over recent years, an individual who had been a client of the bank for several years decided to purchase approximately $500,000 worth of bonds in January. "Every time I talked to them, the bank provided me with reassurance that the situation was only temporary, so I made the decision to invest. It didn't seem like a gamble to me." Companies sell bonds to raise capital from investors, with the borrowed money paid back over time with interest.

The individual invested in AT1 bonds, also known as contingent convertibles, which are considered the riskiest type of bonds issued by banks, despite their high yields. Investors are aware that, in severe circumstances, this type of debt can be written off entirely, which is what occurred when UBS was instructed to acquire Credit Suisse. The Swiss financial regulator, Finma, did not provide a direct response to the lawsuit, but stated in March that the conditions for a write-down were met based on contractual terms.

The AT1 bonds can be eliminated in a "Viability Event," which was triggered by the Swiss government's provision of exceptional liquidity support to Credit Suisse on March 19. Despite this, numerous individual bondholders in Singapore, along with a presumed thousands of dissatisfied retail investors worldwide, have taken legal action against the Swiss authorities. Lawyers have reported receiving a flood of inquiries. The bondholders' primary objection is the method by which the merger was implemented.

The central contention of their lawsuit concerns the order of priority when the bank went into default. According to the bond terms, bondholders are meant to receive compensation first, if feasible, before shareholders. However, in reality, shareholders were allowed to trade their Credit Suisse shares for UBS shares, albeit at a significantly lower rate. Essentially, this implies that those who purchased shares received some compensation, while those who invested in bonds received nothing.

The legal counsel for bondholders has denounced the Swiss regulator's ruling as "an illegal measure" that has had "catastrophic implications for retail and small investors worldwide." "In essence, bondholders were completely deprived of the worth of their bonds as a result of a sequence of irregular administrative procedures," stated Epaminontas Triantafilou of Quinn Emanuel, the law firm representing the bondholders. An additional bondholder from Asia, disclosed that he and his wife had their life savings erased by the decision and were slated to retire this year.

"This is keeping us up at night. It was meant to be a secure investment, but now I believe the reputation of Switzerland and Swiss banks has been destroyed," he remarked. "Who would ever trust Switzerland again?"

Investors are also dissatisfied with the assurances they received from Credit Suisse, despite the bank's significant challenges. According to Vinit Chandra, another bondholder in Singapore, presentations given by the bank encouraged the purchase of bonds as late as 14 March - the day before Saudi investors announced they would not be providing any further financial support to Credit Suisse and the bank's stock plummeted by 25%. "I know individuals, knowledgeable investors, who purchased the bond," he stated. "They informed me that this was dependable, and everything was legitimate."

Credit Suisse were extremely transparent. They claimed that the Swiss authorities would need to activate the kinds of circuit breakers required to write off a bond, which were a long way off.

Credit Suisse has not provided any comments on the lawsuits. Legal experts have expressed doubts about the success of the investors' claims, but the limited timeframe under Swiss law for submitting claims has prompted bondholders to pursue legal action. Some investors are hoping that a collective effort could bring about a settlement, which could trickle down to individual retail investors.