A TRUSTEE for fund companies suing Hypo Real Estate Holding over €320 million in damages must provide more facts to sustain the case, a German judge has said.
The trustee, who sued on behalf of about 56 funds including Allianz’s asset management unit Allianz Global Investors, had not proven he was the right person to make claims, Judge Matthias Ruderisch said at a Munich court hearing yesterday. The trustee had until October to substantiate his case, the judge said.
“The action . . . is lacking clarity,” Judge Ruderisch said. “The suit must show who would have had the alleged damage here – the funds or the holding companies.”
Hypo almost collapsed in September after its Irish unit Depfa Bank failed to get short-term funding when credit markets dried up after the bankruptcy of Lehman Brothers.
Munich-based Hypo has since received a total of €102 billion in debt guarantees and credit lines.
Judge Ruderisch also proposed the possibility of a settlement under which both parties could agree to, for instance, limit Hypo’s payments to shareholders to between 10 per cent and 100 per cent of damages depending upon when they bought shares.
The trustee claims that Hypo on several occasions violated its duties to disclose its situation between June 2007 and October 2008. The lender should have disclosed in July 2007 the risks it assumed by acquiring Depfa, according to the trustee.
Hypo, which had said in two press releases in 2007 that it had not been hurt by the US subprime-mortgage turmoil, disclosed €390 million in writedowns on the group’s collateralised-debt obligations on January 15th, 2008. The stock fell 35 per cent after the disclosure. - (Bloomberg)
