Conclusion of insolvency proceedings possible in 2025 with substantial dividend for the creditors
MUNICH, GERMANY / ACCESSWIRE / August 22, 2024 / Following lengthy and difficult negotiations, the insolvency administrator for Qimonda, Dr Michael Jaffé, and Infineon Technologies AG have reached final agreement in the action relating to undervalue and liability for impairment of capital, which had been pending at the Munich Regional Court at first instance since 2010.
Qimonda AG emerged from Infineon Technologies AG in 2006 after Infineon Technologies had transferred its memory chip division to Qimonda at the time. At its height, it employed 13,500 people globally and had some of the highest sales among global chip manufacturers. It was listed on the New York Stock Exchange in August 2006. In January 2009, Qimonda AG was obliged to file for insolvency after it was unable to continue to run its business profitably in the previous years and was also unable to obtain state funding.
Action relating to undervalue and liability for impairment of capital pending since 2010
The carve-out of the memory chip division took place in 2006 by way of two contributions in kind made to Qimonda AG. In the action brought by the insolvency administrator Dr Michael Jaffé in 2010 before the Munich Regional Court, the insolvency administrator asserted that the memory chip business carved off and contributed to by Infineon Technologies AG was not recoverable. The insolvency administrator brought an action for reimbursement of the impairment of capital from the issue amounts of the shares issued to Infineon as part of the process of carving out Qimonda (referred to as the "action relating to undervalue and liability for impairment of capital").
In January 2024, the expert appointed by the court submitted an opinion that showed a negative value for the contributed domestic and foreign business units. Both parties raised objections to the expert opinion. Infineon had also cited other aspects, such as the fact that the liquidation value of the assets contributed would reach the values required for the contributions in kind. This was not the subject of the expert opinion.
Settlement agreement for 800 million euros
Following the submission of the expert opinion, the parties held in-depth settlement talks. The negotiated settlement now provides for a settlement amount of 800 million euros. The actual payment amount is slightly lower, as Infineon is submitting a declaration of subordination for already established schedule claims, among other things, which corresponds to a value of around 26.5 million euros and at the same time increases the insolvency dividend for the creditors. In addition, the partial settlement concluded in 2014 provided for a credit amount of 15 million euros already paid, which must now be taken into account. After deduction of all items, Infineon will therefore pay 753.5 million euros to the insolvency estate of Qimonda AG.
In total, Infineon will then have paid an amount of around 1 billion euros to the insolvency estate of Qimonda AG. In 2014, the remaining disputes between Infineon Technologies AG and the insolvency administrator had already been resolved in a partial settlement and all patents of Qimonda AG were sold to Infineon Technologies AG. Infineon had already paid a total of 260 million euros at the time.
The creditors' committee of Qimonda AG and the Management Board and Supervisory Board of Infineon Technologies AG have already approved the settlement. It will be implemented without delay, which will then also enable the insolvency proceedings to be concluded and a substantial insolvency dividend to be paid to the creditors.
"This settlement means that the final matter in dispute in the insolvency proceedings over the assets of Qimonda AG has been resolved. Consequently, preparations can now begin to bring the proceedings to a conclusion and allow the creditors to also benefit from this significant success," said insolvency administrator Dr Michael Jaffé.
Proceeds of over 1.2 billion euros realised from disputed transactions
The insolvency administrator Dr Michael Jaffé has thus realised proceeds of over 1.2 billion euros for the creditors in consistently contentious disputes with various parties. For the creditors, this represents a significant success which could not have been expected at the start of the proceedings. As purely a holding company, Qimonda AG had neither substantial liquid funds nor assets that could have been easily realised when the application was filed. Almost all subsidiaries were themselves involved in insolvency proceedings. The success of the insolvency proceedings therefore depended to a large extent on the ability to enforce claims against third parties and also to realise the intangible assets embodied in the patent portfolio to the best possible extent.
At the time, Qimonda AG's patent portfolio comprised thousands of patents and patent applications worldwide. The property rights related to inventions with relevance to the semiconductor, computer and telecommunications industries, most of which had been licensed to major market players prior to the insolvency. Numerous legal disputes were then conducted in Germany and abroad regarding the holding of the licences during the insolvency. In particular, there was a dispute about the effects the German insolvency proceedings had on the licence rights to the US patents of Qimonda AG. The former licence holders, including Samsung, Infineon, IBM, Hynix, Intel, Nanya and Micron, took the position that their licence rights continued to exist despite the insolvency. After the US Bankruptcy Court in Alexandria initially ruled in favour of the insolvency administrator in November 2009, the dispute had to be taken all the way to the US Supreme Court. In the landmark case Jaffé v. Samsung Electronics Co. (135 S.Ct. 66) in October 2014, the US Supreme Court ruled in favour of the licence holders with regard to the US patents.
At the same time, the patent portfolio was marketed via a licensing campaign, which also involved patent litigation. This resulted in the realisation of total licence revenues of around 100 million euros. The patent portfolio was finally offered on the market in an international sales process and sold to Infineon Technologies AG as the highest bidder.
Further proceeds were generated from legal challenges: In particular, transactions that had taken place shortly before the insolvency application was filed were contested and litigation was also conducted in this regard across several instances, which have since been settled to the benefit of the insolvency estate. Proceeds totalling around 200 million euros were realised from these legal challenges.
Positive effects also for creditors of subsidiaries
The conclusion and implementation of the settlement with Infineon Technologies AG will also have a positive impact on the creditors of the insolvent subsidiaries, in particular Qimonda Dresden GmbH & Co. oHG and Qimonda Holding BV. Those creditors will benefit as the companies specified are entitled to substantial claims against Qimonda AG and will receive corresponding insolvency dividend payments, which they will pass on to their creditors. In addition to the employees, this also affects public authorities in Germany and Portugal which had granted subsidies prior to the insolvency. Their claims will probably be satisfied (almost) in full.
Additional information:
For over two decades Dr jur. Michael Jaffé has regularly been appointed by the courts in complex, large-scale insolvency cases where the objective is to secure the assets for the creditors and to realise the best possible value. He has specialist expertise in group insolvency proceedings in multiple stages, and proceedings with cross-border circumstances. Dr jur. Michael Jaffé's best-known national and international insolvency cases include the media group KirchMedia of the late Dr Leo Kirch, the former global memory chip manufacturer Qimonda, and the German subsidiaries of the Petroplus group. As insolvency administrator for three of the German P&R container management companies, he sold the global fleet of containers. In addition, since 25 August 2020, he has acted as the insolvency administrator of Wirecard AG and further Wirecard companies.
The law firm JAFFÉ Rechtsanwälte Insolvenzverwalter has been one of the leading law firms in the fields of insolvency administration, insolvency law and restructuring (in compliance with the ESUG law on further facilitation of company restructuring) for more than two decades, in particular for complex and cross-border proceedings. Its many years of experience, expertise and independence provide a crucial foundation for this, and they are frequently in demand, especially in complex proceedings. This is one of the reasons the firm has enjoyed the trust of courts and creditors for decades, particularly in complex proceedings where the interests of the parties involved are in conflict. With its own highly-effective structure, which has grown over the years, the firm can conduct proceedings of any size in the interests of creditors.
Please do not hesitate to contact us for further information:
Insolvency administrator | Media relations |
Dr jur. Michael Jaffé | Sebastian Brunner |
Lawyer | Corporate Communication |
Specialist lawyer for tax law | Telephone: 0175/5604673 |
Specialist for Insolvency | Email: sebastian.brunner@brunner-communications.de |
and restructuring law |
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Franz-Joseph- Str. 8 |
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80801 Munich |
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SOURCE: Sebastian Brunner Communications
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