Private Equity Firm Crown Ocean Beats Commerzbank In Court

Dec 19 2011 | 2:24pm ET

A private equity firm has won a ruling that would force a Commerzbank unit to pony up payments it had stopped on profit certificates.

The victory, on appeal, by Crown Ocean Capital, is the second time Commerz-owned Eurohypo has been defeated on the issue in the German courts. Earlier this year, hedge fund QVT Financial also won a ruling on the matter.

A lower court had ruled that Eurohypo, which Commerz acquired in 2005, could stop payments on profit certificates—issued by Rheinhyp AG, latter bought by Eurohypo—in 2009 after recording a loss. Commerz is considering an appeal.

"The ruling for the first time clarifies an important legal issue: How do you indemnify profit certificate investors in a takeover?" Crown Ocean lawyer Klaus Steiner told Bloomberg News. "The court reasoned that you have to grant them protection similar to shareholders in that situation under German law."


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