In order to enforce our clients’ claims and to duly represent their interests, we attended the first meetings of creditors for “K1 Invest Ltd.” and “K1 Global Ltd.” on February 1st, 2010, on the British Virgin Islands. We were the sole German law firm to have made the trip to safeguard its clients’ interests, assisted by our partner law firm from the BVI, and to attend the said meetings of creditors. In the course of the proceedings, we were appointed as members of both creditors’ committees and in fact now hold the majority of seats in the K1 Invest creditors’ committee, two out of three. This will enable us to monitor the case even more closely.
The situation has not changed in that the whereabouts of the funds invested continue to be unknown. At present, the liquidators are concentrating on reviewing the payments made into and out of the two funds. Accordingly, it is even more important to have regular contact with the liquidators in order to obtain information directly from the source and, as a consequence, to better represent the claims filed. Wherever creditors decide to aggregate their claims and to enforce them together, their chances at recouping their funds will be higher.
In addition to the central issue of where the funds have gone to, the issue of voting rights also needs to be resolved for those investors who have acquired mere profit participation rights in both of the funds. In the view held by the liquidators, these rights do not give their holders any votes because, under BVI laws, voting rights are tied to shareholding rights exclusive of profit participation rights. Accordingly, the next decisive step will be to ensure that the investor claims are acknowledged in the further course of the proceedings as comprehensive creditors’ rights. Regardless of this fact, all creditors should file their claims with the liquidators, which is still possible in procedural terms. We will be happy to do so for those of the creditors who are our clients. However, any investors who have received partial disbursements from either of the funds or both of them should discuss any claims they may wish to file with us.
We are often asked about the press releases that were published in connection with the whereabouts of the invested money. According to the news press it all seemed to be a big fraud. However, at present, the dispositions and whereabouts of the money cannot be reconstructed conclusively on the basis of the information at hand. Because of this unclear situation, investigations in several countries are ongoing. Furthermore, numerous house searches with confiscations had been conducted. The National Prosecutor is still investigating. Therefore, it is too early for any definite statements.
Already in March 2009, the K1 funds have been evaluated with zero for the first time as the funds were suspended. Now, the final evaluation by the liquidators – who are in contact with us -remains to be seen. During the current stage of the Prosecutor’s investigations, a direct liquidation of the K1 funds cannot be done. It rather needs more information about the stream of money. Therefore, it can be expected that the liquidation of the K1 funds will take a fairly long time. As reported previously, the investigations pursued thus far have identified only some assets of lesser value. Basically, this is an amount of approximately € 260,000.00, credited to an account held by K1 Invest Ltd. with Rabobank in the Netherlands. Because K1 Global Ltd. holds an interest in another company, the amount of € 360,000.00 has been identified, which is credited to the bank account of a company called “Distressed Asset Investments (BVI) Limited”. K1 Global Ltd. holds a nominal share of approximately € 4.9 million in this company. It will need to be determined whether the factual value of that shareholding as at present corresponds to its nominal value. Currently, the liquidators are attempting to at least gain access to the bank account to which the € 360,000.00 have been credited. In this context, we have been informed in the meantime that the banks with which the respective investments have been deposited have automatically defined the value of those investments as “zero” and have subsequently filed this “zero value” with Grant Thornton. Were this to be true, it would at least explain why the individual investments have been registered as “without value”. The rumor is that the investments may actually have a value on the capital market of approximately 10%– 20%. We will continue to investigate this matter.
Mandating our law firm is useful especially with regard to the necessity of clarifying the obscure structures and to enforce valid claims. Hence, we also pursue claims of our clients against financially solid opponents that were not part of the Kiener-group. In light of this, we want to emphasize that we will need to review carefully whether any damage claims might be filed in the various jurisdictions against the parties responsible for the prospectus, the auditors and the banks involved. We have already begun investigating this and are focusing – in accordance with our clients’ instructions and based on our strategy agreed with them – on financially sound opponents who might be charged with having breached their duties vis-à-vis all investors.