Trial Court Issues Judgment Against Credit Suisse in Case Related to the Highland Income Fund
28 Junio 2021 - 6:48PM
The Highland Income Fund (NYSE:HFRO) (“HFRO”), a closed-end
investment company managed by Highland Capital Management Fund
Advisors, L.P. (the “Adviser”), announced an update in the case
against Credit Suisse, AG, Cayman Islands Branch, and Credit Suisse
Securities (USA), LLC (“Credit Suisse”).
The 134th Judicial District Court (the “Court”) issued a
judgment today against Credit Suisse, awarding $121 million to
Claymore Holdings LLC (“Claymore”), the entity formed to pursue the
collective claims on behalf of HFRO and the NexPoint Strategic
Opportunities Fund (NYSE:NHF)(“NHF”) (together the “Funds”).
The Court entered today’s judgment on remand—a result of the
Texas Supreme Court’s April 2020 ruling, which upheld the prior
findings that Credit Suisse committed fraud but remanded the case
to the trial court to enter a new damages award.
Credit Suisse has thirty days to file for appeal of the
judgment, which they are expected to do. The matter will then go to
the Dallas Court of Appeals, where Claymore was successful against
Credit Suisse in the last round of appeals.
The total aggregate award, which stands at $121 million today,
consists of damages and prejudgment interest. The award will
continue to accrue interest until the appeals process is exhausted.
Any final judgment amount would be reduced by attorney fees and
other litigation-related expenses. The net proceeds would then be
allocated to the Funds based on respective damages (approximately
82% to HFRO and 18% to NHF). As legal proceedings are ongoing and
all recoveries remain contingent, no award amount has been recorded
in the Funds’ net asset values at this time.
The Adviser is encouraged by today’s order and pleased to see
the lengthy process advance toward a conclusion that recognizes the
harm caused to the Funds and their investors.
Background on the Case
The case was originally filed in 2013. Following a bench trial
and jury trial, the Court issued its original judgment in favor of
Claymore in 2015, which was confirmed by an appellate court in
2018. An appeal of that ruling sent the case to the Texas Supreme
Court, which heard the case on January 8, 2020.
On April 24, 2020, the Texas Supreme Court issued an order that
affirmed in part and reversed in part the 2018 ruling from the
court of appeals. In the April 2020 order, the court upheld the $40
million fraud verdict that resulted from the jury trial; however,
it did not uphold the contract damages and equitable relief awarded
to Claymore by the trial court following the bench trial.
In its opinion, the Texas Supreme Court noted procedural issues
related to the calculation of damages among the reasons for
reversing part of the appellate court ruling. It remanded the case
to the trial court to determine the appropriate damages
calculations and enter a new damages award, resulting in today’s
judgment.
The case is Claymore Holdings LLC v. Credit Suisse AG, Cayman
Islands Branch et al., case number DC-13-07858, in the 134th
District Court in Dallas County, Texas.
About the Highland Income Fund
The Highland Income Fund (NYSE:HFRO) is a closed-end fund
managed by Highland Capital Management Fund Advisors, L.P.
For more information visit
www.highlandfunds.com/income-fund/
About Highland Capital Management Fund Advisors, L.P.
Highland Capital Management Fund Advisors, L.P. is an
SEC-registered investment adviser. It is the adviser to a suite of
registered funds, including open-end mutual funds, closed-end
funds, and an exchange-traded fund.
For more information visit www.highlandfunds.com.
Contacts
Shareholders: (800) 357-9167
Financial Professionals: (833) 697-7253
Media: (214) 550-4572
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