Deutsche Bank buys out tycoon's debt
Deutsche Bank may have turned the tables on former media tycoon Leo Kirch and his $2 billion lawsuit against the financial institution.
The bank has purchased the outstanding debt owed to creditors of Kirch’s umbrella company Taurus Holding, which encompassed the assets of the Kirch media empire, including former subsidiaries ProSiebenSat1 and Premiere, as well as its stake in the Axel Springer publishing group.
Deutsche Bank has said it is supporting the group’s insolvency administrator, both financially and with information.
According to German news reports, Deutsche Bank bought the outstanding debt for some E9 million ($12.2 million). The move not only makes Deutsche Bank Kirch’s main creditor, it also gives it a seat in the creditor committee overseeing the Kirch insolvency and, most importantly, access to information pertaining to the bankruptcy of Taurus Holding’s core divisions.
Details regarding Kirch’s financial state shortly before the bankruptcy of Kirch Media, the group’s main TV division, in April 2002 could be vital evidence for Deutsche Bank’s defense against Kirch’s lawsuit.
Kirch is seeking $2.1 billion in damages from Deutsche Bank because he blames its former topper, Rolf Breuer, for his company’s collapse.
Last year, Germany’s highest court ruled that Deutsche Bank and Breuer were indeed partially responsible for Kirch’s troubles and were liable for damages. The court said Breuer violated client confidentiality in a February 2002 interview in which he cast doubt on Kirch’s credit worthiness while his company was struggling under a mountain of debt.
Kirch argues that Breuer’s comments caused lenders to refuse him further credit, leading to the insolvency of Kirch Media, the first of several subsidiaries to go under.