Merit Capital declares bankruptcy

September 19, 2022
Today at
17:21

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Listed company Merit Capital is about to file for bankruptcy in the company court in Antwerp. This is what several sources say and the interim administrators confirm the information.

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Merit Capital’s bankruptcy seemed inevitable in the past few days. The money from the Antwerp Stock Exchange has run out and there is no longer any possibility of acquiring or buying time for a solution. Filing for bankruptcy puts an end to more than four months of trying to revive Merit Capital. The National Bank withdrew the license after identifying a number of problems.

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Minority shareholders in particular – well-known Antwerp equine doctor Leo De Backer and Dutch horse entrepreneur Jan Tops – fought fiercely to save Merit Capital, after all. Their latest attempt – a judicial dissolution citation to be able to appoint liquidators – failed last week when it was discovered that the Antwerp company court can only hear the citation on October 5. The National Bank had indicated that it needed 15 full days for its advice.

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Impasse

That same court cleared the situation in the file last week – no one could or wanted to declare bankruptcy – by deciding that that authority rests with the board of directors of the stock exchange. The board then decided on Monday, in agreement with the interim administrators appointed by the court, to “immediately declare bankruptcy”. This was stated in an internal press release which was confirmed on Monday evening by the directors.

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The ball is now back on the court. But it can only take a decision after the SNB has given an opinion as the sector regulator. In principle, the SNB has 15 days to do this, but the board may be ready sooner. In recent weeks, the agency has not seemed inclined to allow any outcome other than bankruptcy.

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Suspension

In August, the SNB did not respond to a request from minority shareholders to temporarily suspend the withdrawal of the license in view of a possible acquisition. They also had three names of the proposed candidates. Previously, the directors had almost reached an agreement with the Luxembourg financial group Fuchs & Associés, but the latter withdrew.

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The board of directors decided on Monday, in agreement with the interim directors, to declare bankruptcy “without delay”.

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In recent years there have also been attempts to transfer Merit Capital to the German bank Renell, even twice, and to the oil group Netoil. These initiatives have always met with a veto from the National Bank. The industry regulator had asked at the end of 2020 that a new buyer be sought in case of problems with the previous buyer, the UK group Duet.

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Six years

Merit Capital, founded in 2000 by Leo De Backer, already has it at least six years at loggerheads with the National Bank. The stock exchange has often been in the news even with capital increases, due to the well-known shareholders and the role of some leaders of the liberal party, such as Karel De Gucht as former co-owner and director. That’s why Merit was sometimes called “the blue factory”.

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In recent months, importance has shifted to the unprecedented battle between minority shareholders in particular and the National Bank. He already had to do it take the worst in received harsh criticism by De Backer. But in a first sentence of the Council of State, you were right for the withdrawal of the permit. The dossier has become a test case for legislation in the financial sector.

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Customer credits

For all these reasons, Merit Capital has received a lot of attention, despite the relatively small size of the brokerage firm. At the end of last year, there were around 3,500 customers and Merit managed around 1.25 billion euros of assets.

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Failure does not mean that the remaining customers run the risk of losing their money or that the Industry Guarantee Fund has to intervene. “Their assets are protected by those of the company and care has been taken to ensure that the two do not get confused,” said a well-positioned source. There is, however, the risk that customers will now see their credits blocked for a while.

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Failure also means that the 40 or so employees risk losing their jobs. Whether curators will let some of them get down to business for a while remains to be seen, but this will be limited. The salary for August has still been paid, there is no money for September. It now remains to be seen whether and when shareholders will take action on the new lawsuits announced, in particular against the National Bank.

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Then there were still twelve

Due to the likely demise of Merit Capital, there are still twelve parties that formally have listed company status, with KBC Securities and Leleux Associated Brokers being the best-known names. The playing field has shrunk considerably in recent years: Leleux has made some acquisitions and parties like Weghsteen and Lawaisse have turned upside down after problems and possible criminal offenses. Ironically, Weghsteen’s business ended in Merit and Lawaisse’s business ended in Dierickx Leys, who also took over management of the SICAV from Merit earlier this year.

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