American Challenger Development has filed a lawsuit against Credit Suisse and its Cayman Islands branch for their alleged role in the digital bank having to terminate a planned merger with Patriot National Bancorp in Stamford, Conn.
The $976 million-asset Patriot National agreed in November to buy American Challenger for $119 million in a deal structured as a reverse subsidiary merger. Patriot had agreed to sell securities to certain investors to raise at least $875 million of capital.
The two sides agreed in July to call off the proposed merger.
American Challenger, in a lawsuit filed with the New York Supreme Court, alleges that the deal fall apart after an agreed-upon sale of a $650 million commercial loan portfolio did not occur.
American Challenger said the loan sale was a critical component of its business plan and would have provided immediate revenue streams, according to the Cayman Compass.
“Credit Suisse’s decision to flagrantly renege on its written and binding agreement to sell these critical assets to American Challenger [resulted] in the failure of a merger that American Challenger was poised to complete,” the lawsuit claims.
American Challenger, which has a digital bank technology and operations platform under the Cache brand, said in July that it has hired Citi as its effort to find another buyer.
American Challenger received conditional approval from the Office of the Comptroller of the Currency in December 2020 to form a de novo national bank. Patriot Bank received conditional OCC approval on June 30 to implement American Challenger’s business plan.