Trial Court Issues Judgment Against Credit Suisse in Case Related to the NexPoint Strategic Opportunities Fund

Rhea-AI Summary

NexPoint Strategic Opportunities Fund (NHF) has received a $121 million judgment against Credit Suisse from the 134th Judicial District Court after a remand. The award results from fraud committed by Credit Suisse, as confirmed by the Texas Supreme Court in 2020. The proceeds, which will attract interest during appeals, will be divided between NHF and Highland Income Fund (HFRO), with NHF receiving approximately 18%. Credit Suisse has thirty days to appeal. No amounts are reflected in the Funds’ net asset values until final judgment.

Positive

• Judgment of $121 million awarded to Claymore Holdings LLC against Credit Suisse.
• Court recognized harm caused to NHF and HFRO, propelling recovery efforts.

Negative

• Credit Suisse plans to appeal, potentially delaying final recovery.
• Net proceeds are contingent and not reflected in current asset values.

Court Enters Judgment on Remand, Awards $121 Million to Claymore Holdings

DALLAS, June 28, 2021 (GLOBE NEWSWIRE) -- The NexPoint Strategic Opportunities Fund (NYSE:NHF) (“NHF”), a closed-end investment company managed by NexPoint 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 NHF and the Highland Income Fund (NYSE:HFRO)(“HFRO”) (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 NexPoint Strategic Opportunities Fund

The NexPoint Strategic Opportunities Fund (NYSE:NHF) is a closed-end fund managed by NexPoint Advisors, L.P. that is in the process of converting to a diversified REIT.

For more information, visit www.nexpoint.com/nexpoint-strategic-opportunities-fund

About NexPoint Advisors, L.P.

NexPoint Advisors, L.P. is an SEC-registered investment adviser. It serves as the adviser to a suite of funds and investment vehicles, including a closed-end fund, interval fund, business development company, and various real estate vehicles.

For more information visit www.nexpoint.com

Contacts

Shareholders: (866) 351-4440

Financial Professionals: (833) 697-7253

Media: (214) 550-4572

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This press release contains forward-looking statements. These statements reflect the current views of management with respect to future events and financial performance. Forward-looking statements can be identified by words such as “anticipate”, “expect”, “could,” “may”, “potential”, “will”, “ability,” “targets,” “believe,” “likely,” “assumes,” “ensuring,” “available,” “optionality,” “viability,” “maintain,” “consistent,” “pace,” “should,” “emerging,” “driving,” “looking to,” and similar statements of a future or forward-looking nature. Forward-looking statements address matters that involve risks and uncertainties.

FAQ

What recent judgment was awarded to NexPoint Strategic Opportunities Fund (NHF)?

A $121 million judgment was awarded to Claymore Holdings LLC against Credit Suisse.

What percentage of the judgment will NexPoint Strategic Opportunities Fund (NHF) receive?

NHF is expected to receive approximately 18% of the total judgment proceeds.

What is the status of Credit Suisse's appeal regarding the judgment against them?

Credit Suisse has thirty days to file an appeal against the recent judgment.

When was the judgment against Credit Suisse awarded to Claymore Holdings?

The judgment was awarded on June 28, 2021.

What were the findings of the Texas Supreme Court regarding Credit Suisse?

The Texas Supreme Court upheld the findings of fraud against Credit Suisse in April 2020.