James Carter, a London-based entrepreneur, approached Aldwych Legal after a long-standing 20-year banking relationship with HSBC. Following a substantial facility, HSBC demanded repayment; Mr Carter engaged in debt restructuring talks, but HSBC escalated by initiating a downgrade process with the United Arab Emirates Central Bank, which led to the withdrawal of support from other funders.
What Happened
Mr Carter’s business faced mounting pressure as HSBC’s demand for repayment intensified. The bank’s decision to trigger a downgrade with the UAE central bank cut off facilities from other lenders, leaving him with limited options to refinance or restructure. In a subsequent development, Mr Carter faced criminal proceedings resulting in a conviction and a five-year prison sentence, with 48 months spent in a high-security prison and a further four months in police cells, under severely challenging conditions.
Despite attempts to negotiate a restructuring plan, the lack of timely information from HSBC about the downgrade and the withdrawal of support from other bankers compounded the financial stress and eroded confidence in his lead banker relationship.
Legal Issues
- Whether HSBC deliberately misled Mr Carter during negotiations and failed to inform him of the downgrade process with the central bank.
- Whether HSBC acted recklessly in advancing or withholding information that contributed to the collapse of funding and his conviction and imprisonment.
- The duties of banks to treat customers fairly and provide transparent information in debt-restructuring negotiations under UK financial services law.
- Potential breach of contract, misrepresentation, and negligence claims arising from the bank’s conduct.
- Broader questions about accountability of banking decisions and their impact on clients and the economy.
Our Approach
We conducted a robust pre-action process, reviewed all correspondence with HSBC, and engaged financial litigation and regulatory experts. Our team prepared witness statements, instructed banking forensics, and reviewed regulatory guidance. We maintained continuous contact with HSBC, seeking clarification and negotiation under the CPR Pre-Action Protocols.
Expert evidence covered financial causation, the impact of the downgrade on credit facilities, and the timing of communications between the bank and the client.
Outcome
The matter settled on confidential terms, with HSBC recognising the need for greater transparency and a commitment to structured financing available to Mr Carter going forward. The outcome restored some banking flexibility and provided financial and practical relief for the client.
Result / Why It Matters
This case highlights Aldwych Legal’s strength in handling complex banking disputes, cross-border regulatory considerations, and sensitive client matters, underscoring our capability to secure meaningful resolutions for business leaders facing financial and reputational risk.
