Aozora Bank Ltd. has asked a New York appeals court to allow it to sue Credit Suisse (CS) again over losses that it claims it sustained from a $1.5B collateralized debt obligation. The Japanese lender claims that a lower court erred in dismissing the claims it had previously brought on the grounds that they were submitted too late.It was last year that New York Supreme Court Judge Charles E. Ramos threw out the CDO fraud lawsuit on the grounds that the state’s statute of limitations had already passed. In New York, fraud claims can be brought within two years from when a plaintiff could have, with reasonable diligence, realized that it was defrauded or within six years of when a transaction had closed.Aozora believes that Credit Suisse employed a “trash bin” for its assets that were toxic. The Japanese lender purchased the Jupiter High-Grade CDO V Ltd CDO notes for $40M on 5/11/07 but did not file it’s case until 6/26/13. Ramos said that Aozara failed to prove that there was no way it could have discovered the problems with the Jupiter V notes that it purchased from Credit Suisse before that filing date.
Meantime, Credit Suisse’s legal team contended that Aozora should have realized there were issues by 11/07—this was when the CDO’s trustee put out a default notice and credit rater Moody’s Investors Service started to downgrade the securities. The Japanese lender, however, argued that it had no idea that the collateralized debt obligations were problematic until several years later.
Aozora Looks to Revive Toxic CDO Suit Against Credit Suisse, Law360, September 21, 2016