Credit Suisse chief executive pegged with bloated interest bill

In a high asset divorce, the financial stakes are enormous and a few words in a settlement agreement can have a large impact. Recently, news broke that a forgetful moment coupled with a few words in a settlement agreement will cost Credit Suisse’s chief executive more than $750,000.

Brady W. Dougan, of the Swiss financial services company, missed the deadline for a divorce settlement payment by 12 days in 2006. An appeals court has now ruled that he will have to pay a whopping $750,000 in interest for being 12 days late. How did a 12-day late payment result in $750,000 in interest?

As part of Dougan’s 2005 divorce, Dougan needed to pay his ex-wife, Tomoko Hamada Dougan, a total of about $15.3 in two installments. Although Dougan made the first payment on time, he was late on the second $7.5 million payment by 12 days. Their divorce settlement agreement called for interest on any late payments, but the Dougans did not agree on the length of time the interest accrued.

Dougan and his legal team argued that he should only have tallied 12 days worth of interest, which equals the length of time he was late on the payment. After reviewing the exact language of the divorce settlement, the court determined Dougan was responsible for interest accumulated from the date of the settlement, not the date the second payment was due.

Because of the court’s ruling, Dougan is on the hook for one year and 12 days worth of interest, which came out just over the $750,000 mark. The court did not go easy on Dougan, who has degrees from the University of Chicago, saying that both he and his team were financially savvy enough to have recognized the consequences of a late payment.

Source: DealBook, “Credit Suisse Chief Penalized $750,000 in Divorce Case,” Kevin Roose, 27 June 2011