Credit Suisse is forced to the back of the line

I do not really have an opinion on this article, besides the fact that it probably sets a bad precedent for future foreclosures down the road. To make a long story short, it appears CS was found guilty of predatory lending, in regards to the Yellowstone Club Ski resort, which is now in foreclosure. Their punishment is there they are going to have to step behind others lenders (they are now a subordinate debt holder behind the DIP financing) waiting to get their money (CS lent 370 million). From Rueters:

Credit Suisse Group AG (CSGN.VX), which lent $375 million to the exclusive Yellowstone Club ski and golf community before the club's bankruptcy, will have to step behind other creditors, after a judge ruled the loan "predatory".

"The only plausible explanation for Credit Suisse's actions is that it was simply driven by the fees it was extracting from the loans it was selling, and letting the chips fall where they may," wrote U.S. Bankruptcy Judge Ralph Kirscher in a preliminary ruling entered on Tuesday.

Credit Suisse lent the money to the club without requesting audited financial statements from Yellowstone Club, among other "curious" decisions, said the judge. The firm received fees of $7.5 million.

"We are disappointed in this ruling and disagree with the court's findings," said Credit Suisse spokesman Duncan King. "We are weighing our options at this time." King declined to comment further.

Credit Suisse has a lien of $232 million, which is now subordinated to the debtor-in-possession financing provided by CrossHarbor Capital Partners LLC, as well as the payment of administrative fees, costs of the bankruptcy and the claims of unsecured creditors.

"The only equitable remedy to compensate for Credit Suisse's overreaching and predatory lending practices in this instance is to subordinate Credit Suisse's first lien position to that of CrossHarbor's super-priority debtor-in-possession financing and to subordinate such lien to that of the allowed claims of unsecured creditors," wrote Judge Kirscher.