Kirch Hasn’t Shown Loss in Deutsche Bank Case, Court Says

Businessman Leo Kirch hasn’t yet shown he incurred 2 billion euros ($2.8 billion) in damages as a result of his media group’s 2002 bankruptcy, which he claims was the result of comments on the company’s creditworthiness by Deutsche Bank AG’s former Chief Executive Officer Rolf Breuer, an appeals court said.

Kirch’s claim he lost the money when he was forced to sell his stake in ProSiebenSat.1 Media AG isn’t substantiated, Presiding Judge Guido Kotschy said at a Munich court today, adding the assessment was preliminary. Kirch may nevertheless be able to win a declaratory judgment that Breuer and the bank wronged him if evidence supports it, the judge said.

“The lower court that dismissed the case without taking any evidence didn’t grasp the suit sufficiently,” said Kotschy. “We need to take the evidence before we can decide the merit of the claims.”

Kirch’s dispute with the Frankfurt-based bank stems from a February 2002 Bloomberg television interview in which Breuer said, “everything that you can read and hear” is that “the financial sector isn’t prepared to provide further” loans or equity to Kirch. Four months later Kirch Holding GmbH, which owned a controlling stake in Formula One and a majority stake in broadcaster ProSiebenSat.1, filed the country’s biggest bankruptcy case since World War II.

Regrets

Breuer, 73, is being sued along with Deutsche Bank. When he appeared in court today, he said he regrets the comments and wouldn’t repeat them if in the same situation again. The interviewer’s question about Kirch came as a surprise and Breuer told the judges he thought declining to respond to them might have been interpreted by the markets as a negative message.

“In hindsight, I have to say this was an accident,” Breuer told the court. “But what I said was publicly known at the time and true. I didn’t break any secret and I didn’t lie.”

An appearance by Kirch, 84, who was scheduled to testify today, was canceled minutes before he was due to appear. His lawyers said his medical condition prevented him from coming to court. His testimony has been postponed to March 25. Another court appearance in January was canceled due to Kirch’s health.

The Munich appeals court judges want to ask Kirch about negotiations between his company’s units and Deutsche Bank. Under German law, a plaintiff can make contractual claims if such negotiations passed the point of informal talks.

Breuer Meeting

In 2001 and January 2002, Kirch had meetings with Breuer and Michael Cohrs, former co-head of investment banking at the lender. The parties are in dispute over what the talks covered. Cohrs is also scheduled to testify March 25.

A declaratory judgment against Breuer and Deutsche Bank would allow Kirch to collect damages of any future losses he incurred. Kirch claims he is still losing money because his groups’ insolvency proceedings are ongoing, making it too early to assess the total damages.

Peter Heckel, a lawyer representing Breuer and the bank, told reporters after the hearing that Kirch has never been able to convince any court he took a loss related to the comments.

Three days ago Kirch lost a parallel case involving the Printbeteiligungs unit, in which he claimed he was forced to surrender in 2002 a 40 percent stake in Axel Springer AG that he’d used as collateral for a loan. Kirch had sought 1.3 billion euros in that suit.

The Federal Court of Justice, Germany’s highest civil court ruled in 2006 that Breuer was wrong to question the condition of Kirch’s group in the interview. While dismissing most of Kirch’s case, the court said the Printbeteiligungs unit may be able to seek compensation because it had a contract with Deutsche Bank.

The court hearing today’s case will also hear Kirch’s claim that Deutsche Bank tried to force him to hire the bank as adviser for the group’s restructuring, Kotschy said.

“If you see the February 2002 events, you cannot reject the claim out of hand that they may have tried to bring Kirch into a situation where he needed to accept the offer,” Kotschy said. “It’s a least a possibility that needs to be examined.”

Today’s case is OLG Muenchen, 5 U 2472/09.

To contact the reporter on this story: Karin Matussek in Dusseldorf Offc at kmatussek@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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