Tuesday, October 13, 2009

KG investors looking for someone to blame

From Fairplay

GERMAN KG houses may be facing a flood of lawsuits from angry investors as more one-ship companies head into restructuring. Investors in more than 100 ships have been asked to return payouts or put up additional equity to prevent insolvency this year.

However, many of them have rejected the capital calls, insisting that the plight of their ships has not primarily been caused by bad markets but by bad management and fraudulent investment concepts.

Capital markets lawyer Oliver Rosowski of Bremen law firm Hahn told Fairplay that his company is now representing clients in disputes with more than 40 ship KG funds, and numbers are rising by the day.

The firm is still seeking to settle the cases out of court and in the most cost-efficient way, but lawsuits are bound to become more common as the crisis drags on.

“With no significant improvement in charter rates on the horizon, the number of KG insolvencies will soar to hundreds next year,” Rosowski said. Claims from investors are usually brought against financial intermediaries who are marketing KG shares, and the KG houses that are structuring the funds.

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