Arcandor proceedings: Görg obtains compensation from former managers
Within the proceedings against the former head of Arcandor, Thomas Middelhoff and ten other former managers, the regional court in Essen has issued two judgments. One judgment unburdens the then members of the supervisory board of the now insolvent Essen group. Pursuant to the other judgment, the former members of the board are liable for the damages that have incurred to Arcandor due to the transactions concerning Karstadt’s property.
Already in summer 2010 Karstadt’s insolvency administrator Dr. Klaus Hubert Görg had filed complaints against Middelhoff and ten other members of the supervisory board as well as the board of management. The reason: According to his calculations, Arcandor incurred damages of 175 million euros due to sale-and-lease-back transactions with the Oppenheim-Esch-funds. Subsequently to the first hearing in April 2011, Görg had to recalculate the amount of damage. Meanwhile, Görg has passed on the insolvency administration to his partner Hans-Gerd Jauch.
In particular it is about Karstadt’s property in Munich, Karlsruhe, Leipzig, Potsdam and Wiesbaden. Jauch reproaches the defendants that they had had to recognise the tenancy agreements with Oppenheim-Esch funds being disadvantageous and had had to rescind those contracts. As they did not do this, the company had incurred damages of 30 to 46 million euros solely at the location in Wiesbaden.
The chamber of commerce of the regional court in Essen conceded one point out of three to the plaintiff. The court clarified in its judgment, on the basis of the course of action, that the managers are basically liable for incurred damages, but only in the Wiesbaden case. In this case, the managers could have prevented the economically disadvantageous tenancy agreements becoming effective. No transfer of property had been carried out with the Land Register. The former Karstadt chairman Christoph Achenbach is excluded from this. The court could not detect a breach of duty on his part.
From the perspective of Middelhoff’s representatives, no damage at all had incurred to Arcandor in Wiesbaden, because upon rescission of the sales, counterclaims would have become due, which would have exceeded the damages of 30 to 46 million euros estimated by the plaintiff. Finally, the funds had ordered to renovate the property for 71.2 million euros according to Arcandor’s ideas.
Dismissal of two claims
According to the court, no one of the managers could have done anything against the tenancy agreements in the Munich, Karlsruhe and Leipzig cases. A non-signature would have been connected to the risk of not being able to use them anymore. This could have resulted in job losses and loss of sales.
The court does not see omitted recourse. The supervisory board had sufficiently examined, whether or not it had had to seek recourse with the board of management due to the present tenancy agreements. Furthermore, such a step could have had effects on the group’s market-price and creditworthiness, as is proven by an expert report of the Rothschild bank. Therefore, the judge assessed the supervisory board’s decision as justifiable.
Appeal against this decision has been admitted. Middelhoff’s representative has already announced to make use of this. The market banks upon a lengthy litigation. Only when the liability issue is clarified, a court can decide on the possible amount of damage.
The managers had concluded D&O insurances. Allianz presides over the insurers’ consortium. Allianz has joined the proceedings as intervener on the defendants’ side.
Legal representatives of the insolvency administrator Hans-Gerd Jauch
Görg (Köln): Dr. Michael Dolfen (leader), Dr. Alexander Kessler, Dr. Klaus Felke, Corinna Struck (Berlin; all dispute resolution), Dr. Helmut Balthasar
Legal representatives of Allianz Global Corporate & Specialty – being the D&O insurer and intervener
BLD Bach Langheid Dallmayr (Cologne): Bastian Finkel (D&O liability)
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