The years-long process for compensation for the former shareholders of Hypo Real Estate (HRE) has largely been completed. The finance agency announced on Tuesday that HRE had concluded a legal settlement and thus ended the investor model procedure. The settlement applies to 93 lawsuits with a total amount in dispute of 8.6 million euros. The plaintiffs now received a total of 2.3 million euros. This means that 99 percent of the original 300 individual lawsuits from the time of the financial market crisis have been concluded. A few remaining lawsuits with an amount in dispute of less than one million euros are still open.
The plaintiffs felt deceived by the management of HRE at the time, which tried to appease the shareholders in several communications over a period of months before the bank’s collapse. In 2014, the Munich Higher Regional Court (OLG) ruled in the investor model case that the Munich real estate financier had published several untrue press releases in 2007 about its economic situation before the looming financial crisis, falsified the stock exchange prospectus for a capital increase and manipulated its balance sheet. In 2021, the Federal Court of Justice (BGH) largely confirmed this ruling.
The HRE got into trouble during the financial crisis of 2007 and 2008 and was taken over in 2009 by the Financial Market Stabilization Fund (FMS), which is managed by the finance agency. In the test case, the Munich Higher Regional Court bundled the most important questions from around 250 claims for damages due to price losses. HRE had already agreed on a settlement with some of the plaintiffs in 2022.
According to the Munich Higher Regional Court, the settlement that has now been concluded is only the second settlement under the provisions of the Capital Investor Model Procedure Act (KapMuG), which is currently being fundamentally revised. This path has hardly been taken nationwide either. “The present proceedings show that its regulations are inadequate for complex proceedings in which different liability questions arise over a long period of time with many affected parties,” the court further explained. The Capital Investor Model Procedure Act was introduced in 2005 in response to a large number of lawsuits against Deutsche Telekom. It is currently being reformed. Next week, the Bundestag’s Legal Affairs Committee will consider a corresponding draft law.