2005-03-16 Phoenix Kapitaldienst GmbH

Involuntary insolvency proceedings were provisionally opened over Phoenix Kapitaldienst GmbH - 30,000 investors are affected

Upon the petition of Germany's Federal Supervisory Authority for Financial Services (Bundesanstalt für Finanzdienstleistungsaufsicht or "BaFin") the Municipal Court (Amtsgericht) of Frankfurt am Main provisionally opened involuntary insolvency proceedings over the assets of the securities investment bank, Phoenix Kapitaldienst GmbH, on 14 March 2005. The Court ordered that any dispositions made by Phoenix would be valid only if made with the consent of the provisionally appointed administrator, Attorney (Rechtsanwalt) Frank Schmitt of the law firm of Schultze & Braun Rechtsanwaltsgesellschaft für Insolvenzverwaltung mbH.

Phoenix traded on the futures markets and distributed the so-called "Phoenix Managed Account" an investment vehicle resembling an investment fund or unit trust. Although the account statements available at the company offices show a credit balance of more than € 800 million, these had evidently been manipulated for years, because a major portion of the money is no longer there and for a long time now has had only a virtual existence. Business was transacted through an account maintained with an English brokerage house. A total of 30,000 investors are affected.

The order for provisional insolvency administration ensures that whatever assets are still in existence will be made available to all creditors equally and not just to those few creditors still able to secure their rights through individual enforcement proceedings.

Phoenix's new management, installed only a few months ago, informed BaFin of the irregularities after it first discovered them in early March 2005. Subsequently, the financial regulator found itself obliged to file its petition for involuntary insolvency and last week also brought the Frankfurt prosecutor's office in on the case. Suspicions are that investors have suffered losses in the hundreds of millions of Euros. As soon as BaFin has determined that it is a qualified case, investors will be able to file compensation claims with the Securities Trading Firms' Compensation Institute (Entschädigungseinrichtung der Wertpapierhandelsunternehmen or "EdW"). The insolvency administrator has already had initial meetings with the EdW.

Meanwhile, Attorney Frank Schmitt, has begun his duties as provisional insolvency administrator and has conducted detailed meetings with management and other parties involved. In addition, a works meeting was convened at which the company's employees were provided detailed information about the current situation and the legal implications of involuntary insolvency proceedings. At present, the provisional insolvency administrator is working to secure assets and discover the debtor's current economic position. In this connection, research has also been initiated concerning the accounts held at the English brokerage house.

Attorney Frank Schmitt will be striving for close coordination and collaboration with the prosecutor's office. He was involved in the criminal insolvency proceedings of the FlowTex Group and gained valuable experience in working with investigators on that case. Investigations will also be coordinated with BaFin.

For further information please contact our spokesperson:
Mail: Presse@schubra.de, Phone: +49 (0) 7841/708-0

Additional information:
  • 2011-02-16 BGH ruling: No right of separation for Phoenix investors
  • 2007-04-25 Majority of creditors agree on insolvency plan – one creditor objects
  • 2006-02-09 Insolvency plan procedure aimed for
  • 2005-05-04 Assets worth approx. 210 million Euros secured
Schultze & Braun Rechtsanwaltsgesellschaft für Insolvenzverwaltung mbH,
http://www.schubra.de, Email: mail@schubra.de