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June 23, 2020

HSBC hit with £1.3bn lawsuit over film financing scheme

HSBC’s private banking unit has been sued over its alleged role in marketing a Disney film financing scheme.

More than 300 investors have filed a claim against HSBC UK at London’s High Court for its involvement in the Eclipse Partnerships, a series of film financing schemes conceived by the banking firm and promoted by Future Capital Partners between 2003 and 2007.

The investors were represented by London law firm Edwin Coe and tax specialist Newport Tax Management.

The film schemes were marketed as a tax efficient vehicle for investment in future returns claiming that investors would make money by buying film rights on studio made films, creating a tax deferral benefit.

Investors paid significant sums into the schemes, and entered into loan agreements with the designated lending banks to buy the film distribution rights to Disney films.

In the lawsuit, investors alleged that HSBC is liable for fraud for making false promise that Eclipse presents a genuine opportunity to invest in blockbuster Disney films.

Edwin Coe and Newport believe that investors were misled as to the structure’s true nature in the Eclipse partnerships as implemented.

Investors are now seeking loss and damages exceeding £1.3bn. HSBC’s private banking arm is estimated to have made £25m in fees by helping to promote the scheme.

Edwin Coe said investors face demands for as much as ten times their investment from HM Revenue & Customs (HMRC).

Bank of Ireland and British multinational investment bank Barclays were the lending banks.

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