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Alternative Market Briefing

Highland vs. Credit Suisse: Hedge fund firm to seek additional pre-judgment interest

Thursday, October 01, 2015

Benedicte Gravrand, Opalesque Geneva:

Many investors lost out on real estate or mortgage-related deals during the credit crisis, and many sued their deal providers for inflated appraisal or misrepresentation. This one is a lingering case in which Credit Suisse, a Swiss investment bank, is again involved.

In early September, a Texas judge ordered Credit Suisse Group to pay Highland Capital Management Lp, an alternatives investment firm, $287.5m for losses on a $540m refinancing of a real estate development that went haywire in the credit crisis.

According to Bloomberg News, Highland’s Claymore Holdings LLC accused Credit Suisse of providing an inflated appraisal for a loan for a Nevada residential and resort community which went bankrupt in 2008.

Highland sought $377 million in damages for allegedly breaching a credit agreement tied to the 2007 real estate deal. Credit Suisse responded that Highland’s losses on $250m in debt it acquired resulted from the real estate crash and not its appraisal.

The Wall Street Journal revealed in December that Credit Suisse had been using a uncommon appraisal method, known as "total net value" that relied on future expected revenue, to value a dozen luxury properties such ......................

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