Mith the beginning of the major criminal proceedings against the Wirecard management, former shareholders of the company are once again painfully reminded of how serious their losses were. In many avenues, investors have attempted to make claims against the insolvent tech company or other parties responsible for the bankruptcy. So far, however, the courts have not been merciful, which has to do with a simple formula of insolvency law: banks and other creditors whose claims are outstanding are the first to claim.
So far, court judgments have been made in lower instances. In January, the Frankfurt district court ruled that investors have no claim for damages against the financial regulator Bafin. The company supervised this. However, the judges decided that the authority was fulfilling its task in the public interest and not for individual investors. Thus, the plaintiffs could not make any financial claims against them in the four proceedings.
The proceedings that ended at the Munich district court at the end of November were more extensive. 22,000 investors had joined forces to file a lawsuit and argued about a claim for damages of 7 billion euros. Banks, social security funds and other creditors have already claimed 3.3 billion euros from the insolvency administrator Michael Jaffé. However, the Munich judges made it clear that German insolvency law deliberately gives priority to creditors, while investors are closer to corporate decisions and can therefore only be served from the insolvency estate at the bottom.
Union Investment keeps fighting
The prominent plaintiff was the fund company Union Investment from the cooperative camp, which had argued with fraudulent and misleading communication from Wirecard before its own share purchase. After the verdict, she left it open whether she would appeal. Union Investment has now decided to seek the next instance, as a spokesman confirmed on Thursday.
However, German shareholders’ protectors see greater prospects in a class action lawsuit against the auditor EY. During the regular balance sheet audit, the latter had not objected to the 1.9 billion euros that had been booked but could no longer be found before the bankruptcy occurred. The German Protection Association for Securities Ownership has set up a foundation under Dutch law and has been courting complaining investors since this spring.
In the meantime, 12,000 investors have been registered who hope to be able to fight for 1.5 billion euros via an out-of-court settlement with the global EY for manager liability insurance for those affected. The lawsuit is currently being prepared and should begin at the beginning of next year. Private and institutional investors have joined.