Berlin The district court in Munich was chosen by a man from the front row of German insolvency administrators: Michael Jaffé (56), as an expert, is to prepare the expert opinion on Wirecard AG’s insolvency application. This gives the Munich lawyer good chances of being appointed as the Group’s provisional insolvency administrator.
Over the past two decades, Jaffé has earned a reputation for being able to deal with particularly complicated major bankruptcies. He became known in 2002 with his appointment in the bankruptcy of Leo Kirch’s media empire, which included the Pro Sieben Sat 1 broadcasting group. Jaffé skilfully navigated through the complex company network. He had to negotiate with film studios, rights holders and banks.
He managed to keep most of the 11,000 jobs. He gave creditors an unusually high 40 percent. Even if the process dragged on for more than 16 years, it was the big breakthrough in Jaffé’s career. Since then he has been called on to help with major bankruptcies, such as the caravan manufacturer Knaus Tabbert or the chip manufacturer Qimonda.
In March 2018, Jaffé took over another mega-procedure, which is likely to be very present to the judges at the district court in Munich and may have influenced their selection. In the bankruptcy of the P&R Group, the former market leader for direct investments in sea containers, 3.5 billion euros are on fire.
Around 54,000 private investors, mostly senior citizens, fear for their money there. Instead of the 1.6 million containers sold, Jaffé only found 600,000 in stock. The case is considered one of the largest investment scandals in the history of the Federal Republic.
Mastering the extreme number of creditors poses enormous challenges for the bankruptcy administration of P&R companies. “Jaffé has a large law firm, it is known for being able to deal with the mass of creditors,” says capital market lawyer Peter Mattil from Munich, who sits opposite Jaffé on the P&R creditors’ committee. That’s why the following applies in Munich: “If it goes over a billion, it ends up with him.”
In the case of P&R, the Jaffé team counted 86,000 claims registrations, which is why he moved the meeting of creditors to the Munich Olympiahalle. 2500 investors listened to his statements there. Again and again Jaffé received scene applause, for example when he announced that he would not sell a container at bargain prices.
Direct investments in sea containers were particularly popular with older investors due to their supposed security. P&R sold the steel boxes and immediately rented them back. The investors received the rents and a buyback offer after five years. The bottom line was that they achieved returns of between three and five percent.
In November 2018, Jaffé also announced his plan to send the container fleet over the oceans a decade ahead of time and to channel the profits to the bankruptcy estate in a full hall at the German Congress of Insolvency Administrators. “If a cargo load is at sea and you find that 60 percent of the cargo has gone overboard, then there is no point in sinking the ship.”
But keeping the battered ship P&R seaworthy was anything but easy at first. When Jaffé in Grünwald took over the insolvent sales companies from P&R, he faced a key problem. The 600,000 existing containers were located in a Swiss sister company that was not bankrupt and that the company’s founder Heinz Roth controlled via shares.
Roth could have formally locked Jaffé in Switzerland, the P&R bankruptcy would very likely have escalated to a total loss in a few weeks. Jaffé prevented this by taking advantage of the extremely high pressure on Roth in the dramatic days of April 2018 to persuade him to seize his shares in the sister company. Peter Mattil remembers: “He – rightly – took him into the headlock.”
Determined, assertive, consistent
The worry that Roth would leave Switzerland with all the money was averted. Jaffé took complete control by realizing the liens and taking over the majority of the shares. In the latest status report on P&R, Jaffé writes: Preserving the company in Zug as a paying agent for the global exploitation of the container fleet is the prerequisite for “generating funds for the bankruptcy estate”.
In the meantime, 300 million euros are in a special account that Jaffé has secured through container management in Switzerland. According to the report, business is stable even in Corona times. The utilization of the containers is 96 percent and the sales of old stocks have started. His declared goal is to save a billion capital and distribute it to the creditors.
Determined, assertive, consistent – these are the characteristics that Jaffé lawyers say who worked with him or had to fight against him. His critics object that it is only a certain unscrupulousness that enables Jaffé to go into large-scale proceedings.
“He pulls his boot through,” says the Berlin investor lawyer Wolfgang Schirp, who is already arguing violently with the insolvency administrator. If he should characterize him as an opponent, he thinks “more of a two-handed sword than a foil”.
Because many old investors at P&R were served with fresh capital from new investors, the construct is now considered a pyramid scheme. At that time, the prosecutor’s office began investigating former executives on suspicion of fraud.
Jaffé apparently had a trusting working relationship with the authority. When the investigators requested telephone surveillance against Roth in June 2018, they also relied on Jaffé’s findings on the target and actual stocks of the containers.
Coincidence or not: When P&R founder Heinz Roth indicated that he would like to have his shares seized in Switzerland, he ended up in custody shortly afterwards. From then on, he had no influence on the bankruptcy proceedings. An illness finally prevented the trial against Roth. The public prosecutor’s office in Munich 1 was able to complete the investigation quickly.
These are the same law enforcement officers who are now investigating the management manipulation of Wirecard AG on suspicion of market manipulation. It should not have been judged against Jaffé at the district court when choosing the appraiser that one already knows each other. Especially since he can rely on many experiences with criminal bankruptcy.
Jaffé was not available for the Handelsblatt on Thursday and Friday. That also fits his style. He is not hiding from the press. But he only talks to reporters when he really has something to say. At Wirecard AG, it may be too early a day after filing for bankruptcy.
More: The Wirecard case: How ex-boss Markus Braun drove the company into bankruptcy. Read more here.
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