Turnaround in the Wirecard trial: German court rules on whether shareholders' capital market damages claims can be classified as insolvency claims

Author: Frederik Kaup

Background 

Wirecard, a German company providing electronic payment services, filed for bankruptcy in 2020, after it became known that one quarter of the company's total assets were missing from its accounts. Creditor claims amounting to 15.4 billion euros were registered in the bankruptcy including the claims of 50,000 shareholders, seeking damages for the acquisition of shares due to fraudulent claims made by Wirecard. 

On 23 November 2022, the "LG München I" Regional Court of Munich ruled that the shareholders' damages claims for breach of capital markets law rank as equity and not as general unsecured claims in the Wirecard insolvency (see our Alert). 

Decision 

On 17 September 2024, the higher ranked “OLG München” (5 U 7318 /22 e) overturned the decision. The capital market law damages claims are recognised as insolvency claims. The court ruled, that because the claimant’s shareholder position was established due to the alleged fraudulent act, the claims were not inextricably linked to the shareholder position. Therefore, the claims are pursuable as third-party creditor rights under the German insolvency code. 

Key takeaways

The decision gives rise to damages claims amounting to 8.5 billion euros in the insolvent estate which if accepted will heavily dilute recoveries for other creditors. The ruling will most likely be appealed and the issue clarified by the German Supreme Court. 

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.