Wirecard faces a claim for compensation by Union Investment.
Union Investment, a major shareholder in the collapsed financial services company Wirecard, is currently embroiled in a significant lawsuit against Michael Jaffé, the insolvency administrator. The lawsuit seeks compensation for losses incurred due to Wirecard's collapse, following a ruling by the Higher Regional Court (OLG) Munich that recognises shareholders as creditors with valid claims for damages based on fraudulent deception by Wirecard's management.
The OLG's decision overturned a previous ruling by a lower court and provides support for Union Investment's argument that shareholders have a right to compensation. However, Michael Jaffé has announced his intention to challenge the OLG ruling by appealing to the Federal Court of Justice (Bundesgerichtshof) to clarify the priority of claims in the interest of all creditors.
The ongoing insolvency proceedings have seen a total of over €15.4 billion in claims filed, with about €8.5 billion attributable to shareholders. So far, insolvency administrator Michael Jaffé has recovered approximately €650 million for the estate, which may now include Union Investment.
The lawsuit, driven by the need to act in the best interest of Union Investment's clients, alleges that more than 70 publications and corporate statements made by Wirecard between 2014 and 2020 were misleading and fraudulent. If successful, the lawsuit could set a precedent for other institutional shareholders seeking compensation.
Nadine Herrmann, a lawyer from law firm Quinn Emanuel, is representing Union Investment in the lawsuit. Herrmann claims that Union Investment was induced to purchase securities due to fraudulent and misleading statements by Wirecard. She argues that shareholders' claims for damages should be treated similarly to those of creditors in an insolvency procedure.
The total losses suffered by shareholders due to Wirecard's collapse are nearly €2 billion. Union Investment believes they will not receive compensation without the lawsuit, emphasising the importance of the case.
Recent developments in the Wirecard insolvency case, including the sale of Wirecard's European core business to Spanish bank Santander and Wirecard North America to US payment company Syncapay, have been reported by the Financial Times. The final resolution will depend on the Federal Court of Justice's ruling on claim prioritization in Wirecard's insolvency.
In German law, shareholder claims typically have the lowest priority. However, Herrmann continues to argue for shareholders' claims to be treated similarly to those of creditors, potentially paving the way for a significant shift in insolvency law. The outcome of this lawsuit could have far-reaching implications for shareholder rights in insolvency proceedings.
[1] Source: The Financial Times
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