Opening of the HGAA proceedings: BayernLB claims damages together with Hengeler and Clifford

BayernLB can raise hopes. Proceedings concerning the purchase of the Austrian bank Hypo Group Alpe Adria (HGAA) began promisingly for the Landesbank, which requests damages of its former managers. The judges think that there should be a 25 million euro settlement agreement instead of the claimed 200 million euros.

BayernLB claims damages from eight of its former members of the board. It reproaches its former top managers’ breaches of duty in the course of the purchase of the HGAA. The transaction became a grave of billions and the tax payer had to pay 3.7 billion euros in the end. The Landesbank had filed a corresponding complaint in the middle of last year.
Now, the court has proposed an out-of-court agreement, because the complaint was very complex and there had been counterclaims filed concerning several aspects. Besides the purchase of HGAA, the bank’s ABS transactions are also litigious. The settlement sum proposed by the court is far below BayernLB’s claims.

The judges differentiated between the eight defendants and recognised in the cases of Werner Schmidt, former head of the Landesbank, and Gerhard Gribkowsky, former Chief Risk Officer, failures that may be assessed as breaches of duty. Concerning all the other defendants, merely “slight negligence” could be assumed.

Experts do not think it likely that a settlement agreement will be concluded, because the liability insurer is said to have already opposed an out-of-court agreement in the run up. XL Insurance, the representative of the liability insurers, has joined the proceedings as third party. According to market information, the former members of the board’s D&O insurance would reimburse 105 million euros.

Without XL’s approval, there will be no amicable settlement. Now, both sides must deliberate on the settlement agreement. The next oral hearing is scheduled for the end of October.

Legal representatives of BayernLB
Hengeler Mueller (Munich): Dr. Viola Sailer-Coceani, Dr. Markus Meier (both leaders), Prof. Dr. Michael Hoffmann-Becking; associates: Dr. Christopher Strehle, Verena Nosch
Clifford Chance (Munich): Dr. Patrick Biagosch (corporate), Sebastian Rakob (Frankfurt), Tim Schreiber (both litigation), Gwendolyn Müller (corporate); associates: Oliver Seyd (litigation), Gerhard Köglmeier, Christian Gräf (both corporate)
DLA Piper (Munich): Dr. Thomas Gädtke; associates: Dr. Jan-Ulf Suchomel, Peter Ruttmann (all litigation)

Legal representatives of XL Insurance (third party)

BLD Bach Langheid Dallmayr (Cologne): Björn Seitz (insurance/liability law)

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