1. Option 1
In order to exclude the existing risks as far as possible, we recommend that you sue the HCOB before the end of 31.12.2019 and announce the dispute to BdL, HSH N, RESPARCS I and RESPARCS II. The third party notice is important for two reasons:
(i) If the court decides that it is not you but only the silent partners (BdL, HSH N, RESPARCS I, RESPARCS II) who are entitled to assert the claims for damages due to the violation of the silent partnership agreements, you may, in a second lawsuit, take recourse against the silent partners in this respect or claim from them that they (alone) are obliged to act.
(ii) If the court decides that you are entitled to enforce the claims based on the breach of the silent partnership agreements, but that the claims for the fiscal years 2009 to 2013 (BdL, RESPARCS I, RESPARCS II) or 2014 (HSH N) have expired for the reasons stated in Section II.1, you may, if necessary, hold yourself harmless in a second legal action against the respective issuers (BdL, RESPARCS I, RESPARCS II).
For example, the action structure for SPARC bonds would be as follows:
In our opinion, this is the safest way from a legal point of view, despite the imponderables that exist in this respect.
2. Option 2
Since the aforementioned route would involve costs for you (attorneys' fees and court costs), we initially requested RESPARCS I and II out of court by letter dated 26 August 2019 to enter into negotiations with us regarding the conclusion of a waiver of limitation agreement with the bondholders represented by us, including you depending on the issuance, in view of the possible recourse claims.
The writs are attached to this e-mail.
RESPARCS I and RESPARCS II and their lawyers from Deloitte Legal have so far been cooperative. Whether these are prepared to conclude a waiver of limitation agreement is, however, open.
But even if we succeeded in concluding a waiver of limitation agreement with RESPARCS I and RESPARCS II as well as with the respective general partners of these companies and their managing directors, you would still run the risk that courts would later hold the view that not RESPARCS I and RESPARCS II, but that you as the bondholder would have had to enforce the claims in good time. For this reason, option 1 is safer.
BdL has not been cooperative so far.
Nevertheless, we will address BdL with identical letters and request them to enter into negotiations with us regarding the conclusion of a waiver of limitation agreement. Based on our previous correspondence with BdL, we estimate that the probability that BdL is already involved in this is low.
3. Option 3
The most cost-effective way, but not legally secured at all, is not to take any measures and to rely on you participating in a later repurchase offer.
We do not consider it likely that a repurchase offer will be made any longer. Assumed the termination of the silent partnership agreements declared by HCOB is effective, the bonds expire on 31.12.2020. A legally binding decision will most likely not be available in any legal action until this point in time. As things stand today, we assume that, if an out-of-court settlement is reached at all, it will not be reached until the bonds expire.
You may be able to participate in such out-of-court settlements, but this is by no means certain. On the contrary, we do not rule out the possibility that - assuming the (partial) success of the respective lawsuits - only those bond holders who become active themselves will participate in a legal success.
We are aware that other market participants advertise 'to use their best endeavours to engage each other in any settlement negotiations with HCOB, its advisers and/or shareholders', but such effort clauses do not alter the risks set out above for those market participants who do not take action themselves. If the statute of limitations were to apply, HCOB would have no reason to accept that bondholders who have not prevented the statute of limitations would be "taken along" in settlement agreements with bondholders who have prevented the statute of limitations. Bondholders who prevented the statute of limitations from becoming effective would most likely not allow any settlement with HCOB to fail if HCOB resisted, because HCOB is not prepared to integrate bondholders who did not prevent the statute of limitations from becoming effective into the settlement. At any rate, the effort clauses mentioned above do not offer any protection against this.
IV. Further action
As soon as it has been determined whether option 2 can be considered at all, which depends on the willingness of BdL, RESPARCS I and RESPARCS II to cooperate, we will ask you how you would like to proceed.
We would then send you a cost estimate for option 1.
A cost estimate can only be made if we know which investor is participating in a lawsuit with which nominal volume.
This is only a convenience translation. The German version of the update is the official and authoritative version.
Kind regards