Ruth Kirch, the 87-year-old wife of the late Leo Kirch, took the initiative to reach the 928 million-euro ($1.28 billion) settlement with Deutsche Bank AG after at least three failed attempts in previous years, according to the agreement.
The Kirch side and Deutsche Bank agreed to end all litigation and refrain from any such disputes in the future on “the initiative of Frau Ruth Kirch,” they wrote in the preamble of an agreement published in Germany’s gazette for corporate filings. The aim of the pact is to reach a “final peace.”
“This dispute overshadows an appropriate valuation of the entrepreneurial lifetime achievement of Dr. Leo Kirch,” the preamble of the contract reads. His media group “decisively shaped the German film and television landscape for decades.”
The settlement, signed last week, ended a litigation battle between Germany’s biggest lender and Kirch that triggered a criminal probe against the bank’s management. According to the agreement, the amount claimed by the Kirch side, including interest, totaled about 20 billion euros.
Under the deal, KGL Pool GmbH, a company bundling and litigating claims of Kirch group units, received 766.25 million euros. Darpar, a company set up to be the official heir of Leo Kirch, received 8.75 million euros. Deutsche Bank also has to pay about 113 million euros of interest and a lump-sum of 40 million euros for costs. Germany’s taxpayers will collect almost 30 million euros, according to the agreement.
The interest was calculated using a rate of 5 percent starting March 24, 2011, -- the day when the the Munich court hearing the central disputes proposed a 775 million-euro settlement. Deutsche Bank rejected that proposal, two people familiar with the case said.
Under the agreement, Deutsche Bank withheld 25 percent of tax on the interest payments, which will be transferred to the authorities.
Kirch, who died in 2011, and his heirs have been fighting Deutsche Bank ever since former Chief Executive Officer Rolf Breuer questioned Kirch’s creditworthiness in a 2002 Bloomberg TV interview. The media group filed for insolvency in the following months. The dispute led to dozens of lawsuits and to criminal investigations, including one by Munich prosecutors over the court testimony of bank executives. That probe is also targeting co-CEO Juergen Fitschen.
The Kirch family, under the settlement, will retract all criminal complaints it filed over the dispute and tell prosecutors it’s no longer interested in criminal prosecution. While such a move doesn’t end criminal probes, it may help Deutsche Bank settle some of the pending investigations.
The Kirches must also make its law firm drop a suit over a related spy scandal in which a private detective hired by the lender asked a law school graduate to apply for an internship at the Munich-based firm. Deutsche Bank stopped the effort before the lawyer started, according to an 2009 internal investigation.