(Bloomberg) -- HSBC Holdings Plc was sued by hundreds of investors in a 1.3 billion-pound ($1.6 billion) lawsuit over tax breaks linked to Walt Disney Co. film financing.
The investors say in a London lawsuit that the bank is liable for false promises made by a client, Eclipse Partnerships, which touted opportunities to back films like “Pirates of the Caribbean 2” and “Confessions of a Shopaholic.” HSBC helped promote the scheme and may have received more than 25 million pounds in fees for its role, lawyers for the plaintiffs at Edwin Coe LLP said in a statement.
The lawsuit is the latest fallout from the decade-old British film partnerships tax scandal. Investment in the film industry ballooned after the government boosted tax credits in the late 1990s. The change allowed people to cut their personal tax bills, but U.K. authorities tightened the rules in 2007 after questions over the legitimacy of some of the productions.
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In the most recent case, many of the investors have entered bankruptcy and are facing demands for millions in back taxes from U.K. authorities as a result of the changes.
“It was a risk-free income stream for Disney, HSBC and the lending banks -- but financially catastrophic for its unwitting investors,” said David Greene, a senior partner at Edwin Coe, which is representing the investors.
HSBC declined to comment on the lawsuit. The investors aren't suing either Disney or Eclipse.
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