Yes and no. Both statements are correct, but differential settlement is not an "instantaneous" problem, when a building, particularly a reinforced concrete one

Yes and no. Both statements are correct, but differential settlement is not an "instantaneous" problem, when a building, particularly a reinforced concrete one, is subject to differential settlement it deforms itself following the movements of the foundations or of the soil under the foundations, and this normally allows for several centimeters of deformation (in practice a building as seen from a side is made out of squares, when the foundations on one side lower, squares become a rhomb/diamond). All the rigid elements in the plane of the square (please read as walls, be them brick or other material) are forced "out of their natural shape" and start developing cracks. Nornally settlement is a process that is very, very slow, years, months or weeks, during which the cracks begin developing, long before the structure collapses. This must have been a form of failure of the soil that happened in a very short time, more similar to a landslide than to the kind of settlement common in soils (usually sands) near a waterfront.