Final Verdict in German Pellets Bankruptcy Saga
Ruling in the German Pellet Pleite Lawsuit now Final and Enforceable - The First Instance Court ruled that the Commission neglected its duties outlined in Article 85 (1) of the Treaty.
In the long-awaited conclusion of the German Pellets saga, the trial surrounding the insolvency of this former wood processing powerhouse based in Wismar has come to an end. The prosecution and defense have relinquished their right to appeal the judge's decision, making the verdict against the former CEO legally binding.
Initially a global player in the production and distribution of wood pellets for heating, German Pellets, situated in Wismar, has faced a tumultuous journey. The regional court in Schwerin sentenced the 68-year-old founder to a suspended two-year sentence for deliberate insolvency and fraud. Unsurprisingly, this ruling has generated ripples among local residents and disgruntled investors alike.
The trial, which spanned over two years, was ultimately resolved by a plea bargain. With the prosecution dropping most of its charges, the defendant—who had previously cultivated a career in publishing across Hesse and Thuringia—consented to the remaining accusations. Claiming that 97% of the original charges were withdrawn, the defense highlighted a reduction in damages from EUR77.3 million to EUR2.5 million due to the shorter timeframe of offenses under examination.
Small investors bear the brunt
A key aspect of the trial centered on the staggering losses incurred by small investors. As the court elaborated, German Pellets could not finance its ambitious European and American expansion plans utilizing existing business resources or bank loans. In a bid to secure additional financing, the company issued profit-sharing rights, enticing investors with attractive returns. Over EUR 260 million was raised from an estimated 17,000 people, numerous of whom were investing their retirement savings. Regrettably, the collapse of German Pellets in February 2016 led to the loss of most of this investment. While more than 100 investors attempted to recover their losses through civil lawsuits, the majority were unsuccessful.
Post-bankruptcy, the main pellet plant in Wismar's wooden port has been under new ownership since 2016, employing around 60 people. Subsequently, all other business units continued their operations as well, according to the court records. The company's assets were sold for EUR 45 million, with EUR 36 million going to the banks, while total claims amounted to EUR 427 million. Originally, claims worth EUR 2 billion were filed. The protracted insolvency proceedings, which have been ongoing for nearly a decade, remain incomplete.
- Insolvency Trial
- German Pellets
- Bankruptcy
- Deferred Sentence
- Small Investors
- Wismar
- Schwerin
- Plea Bargain
- Civil Lawsuits
- Post-Bankruptcy Operations
- The final verdict in the German Pellets insolvency trial, held in Schwerin, has been announced, sentencing the 68-year-old founder to a suspended two-year deferred sentence for deliberate insolvency and fraud.
- The lengthy insolvency trial of German Pellets, the former wood processing powerhouse based in Wismar, was concluded with a plea bargain, resulting in the defendant's agreement to remain charges related to the case.
- Despite the plea bargain, small investors bore the brunt of the losses as the court revealed that German Pellets collapsed due to its inability to finance European and American expansion plans, leading to the loss of over €260 million from around 17,000 investors.
- Post-bankruptcy, the main pellet plant in Wismar's wooden port has been under new ownership since 2016, employing around 60 people, while the company's assets were sold for €45 million, with around €36 million going to the banks, according to the court records.
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