Disgruntled Investors
In the case of the BayWa deal, there was a prospectus that enabled the company to raise equity from its shareholders. BayWa’s two major owners — German and Austrian agricultural cooperatives that are tied to the region’s savings banks — agreed to create up any shortfall.
In the finish, the backstop wasn’t necessaryed, with the company seeing an 89% takeup and raising about €179 million, according to a November statement. BayWa declined to comment.
Still, in the case of Varta, disgruntled investors contfinished that a new company could have raised the cash from minority shareholders, creating the lack of accounts a moot point, according to court documents seen by Bloomberg News.
The regional court in Stuttgart, however, threw out the appeal, declareing that the complainants hadn’t demonstrated that their alternative scenario was feasible.
For now, a major overhaul of the StaRUG law appears unlikely, with an increasing number of companies turning to the process to avoid a more costly insolvency.
“Individual shareholders losing their investments is not a consequence of the StaRUG, or the German legislator or the creditors,” declared Milbank’s Ruf. “It reflects the inherent risk of an equity investment decision.”
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