HSBC hit with $2.3bn suit over Disney investments

Banking giant HSBC is facing a $2.3 billion (GBP 1.3 billion) law suit over investments in Disney films allegedly promoted by its private bank in the UK.

The Eclipse Film Partnerships were a series of film financing schemes conceived by HSBC and promoted by Future Capital Partners.

Eclipse allegedly claimed investors would have the opportunity to back films like Pirates of the Caribbean 2 and Confessions of a Shopaholic.

UK law firm Edwin Coe is representing a group of Eclipse Film Partnership investors who paid "significant sums" into the schemes and entered into loan agreements to buy the film distribution rights to Disney films.

The Eclipse investment was promoted as a tax efficient vehicle that would see investors profit on future returns on film rights on Disney films.

Investors thought they were entering into a bona fide investment in the film industry and that the scheme structure had been subject to due diligence by those participating in the sale and leaseback of Disney film rights.

However, an investigation by Her Majesty's Revenue and Customs revealed that the Eclipse Film Partnerships had never been trading with the intention of making a profit.

"Members face the prospect of tax demands far in excess of any taxable benefit they received from their participation in the schemes," Edwin Coe said.

"HMRC has made it clear that it intends to pursue members for payment of tax, penalties and dry tax and interest.  As yet the matter is not resolved."

The firm described the tax bills investors could be facing after the HMRC investigation as "life changing".

Now Edwin Coe has filed a redress claim on behalf of a group of those investors focusing on the trading status of the partnerships.

The lawyers believe that investors were misled as to the true nature of the structure of the Eclipse partnerships.

"Had the true nature been known the schemes would not have proceeded at all and no individual would now be left with the tax and other losses flowing from the schemes," Edwin Coe said.

"The Redress action seeks to recover all losses currently known and any prospective losses such as those derived from 'dry tax'."