Corporate attorney Wolfgang Blumers felt at home in the courtroom. Over the course of his long career, he had handled many complicated tax cases in Stuttgart’s higher regional court. But this time was different – he was the plaintiff, not the counsel. And he wanted money. Lots of it.
Sitting meters away were the defendants, Willem van Agtmael and Wienand Meilicke, Mr. Blumers’ friends and colleagues of nearly 30 years.
Mr Blumers was seeking damages of €220 million, ($250 million), from them. He claimed they had betrayed him in a “gentlemen’s agreement” gone wrong.
The plaintiff and defendants once served together on the board of the foundation that ran the Stuttgart-based Breuninger department store chain.
In Stuttgart, in southwestern Germany, Breuninger is much more than just a name. The upscale department stores have an excellent reputation among the Mittelstand, Germany’s core of small and medium-sized businesses known for its many traditional family firms.
Breuninger suffers from a common malady that also afflicts other mid-sized family businesses in Germany, namely, succession.
Other big names – Hertie, Neckermann, Quelle – may have disappeared from the German retail sector over the years, but Breuninger is still going strong. Its flagship store in Stuttgart is the second largest in Europe, second only to Harrods in London. In 2013, the company opened a new store in Düsseldorf’s luxury shopping district.
But Breuninger suffers from a common malady that also afflicts other mid-sized family businesses in Germany, namely, succession. The question of who will take the reigns has deeply divided Breuninger, pitting potential heirs and board members against each other.
Mr. Blumer’s battle marks a new chapter in the company’s history. In earlier times, the will and legacy of company patriarch Heinz Breuninger would have held sway. Today, it is drowned out by an acrimonious chorus of would-be heirs.
It all boils down to the question: Who are the company’s legitimate owners?
Currently, 20 percent belongs to the Bretschneider Seidel families and 40 percent to each of the former foundation board members Willem van Agtmael and Wienand Meilicke.
One-time chairman of the board Wolfgang Blumers owns nothing, but he says that’s not what was agreed.
The dispute has its roots in tragedy. Heinz Breuninger, grandson of the founder, Eduard, took over the company in 1947 and led it to new heights. For more than a quarter century, his will was law, and that will stated that his son Günther would be his successor.
But when young Günther finished his high school diploma in 1962, he went on an Easter ski trip with friends to Austria and was killed in an avalanche.
With his son died, so did Heinz Breuninger’s hopes for keeping company leadership in the family. He also had three daughters, but felt running the company was a man’s business. He set up the Heinz Breuninger Foundation to run the company, for which he alone made the rules.
When Mr. Breuninger was dying of cancer in 1980, he called a notary to the hospital. He dictated that the foundation would hold the company’s shares and its five board members would lead the department stores. He wanted the board to be run by a mix of businessmen, lawyers and accountants – and none of them should get rich.
Mr. Breuninger said board members, including Mr. Blumers, Mr. van Agtmael and Mr. Meilicke, should be paid “one and a half times the starting salary of a saleswoman.” The rest of the profits should go to charity.
Mr. Blumers ex-colleagues don’t deny they had a “gentleman's agreement,” but insist it was non-binding.
The arrangement worked well for many years, until the end of the 1990s. By then, the board was growing concerned about Breuningers long-term competitveness and considered a merger. They worried that the charitable arm of the foundation made it less attractive as a business partner. Meanwhile, Mr. Breuninger’s daughter Helga, who oversaw the charity work, wanted more freedom from the board.
After a long legal process, the foundation was dissolved in 2004 and the former board members agreed to buy the company shares from Helga, who legally inherited them. At that time Mr. Blumers was bound into a partnership agreement at a law firm and was unable to buy the shares in the company he had helped run for over two decades.
Mr. Blumers said that he and Mr. van Agtmael and Mr. Meilicke agreed the others would buy up and look after his 20 percent share until he was free to buy them back, at the latest by 2011. “We agreed that Mr. van Agtmael and Mr Meilicke would look after the shares in a kind of trust,” Mr. Blumers, now 70, said.
But when it came to it, the others refused to sell. In the intervening years, Breuninger’s fortunes picked up. Mr. Blumers was left with nothing. Now he is looking for €220 million in damages, a figure based on Breuninger’s current estimated worth of more than €1 billion.
Mr. Blumers ex-colleagues don’t deny they had a “gentlemen’s agreement,” but insist it was non-binding. “The company was in a bad place financially back then. Mr. Blumers decided not to take part at the time. He didn’t want to take the risk,” their attornies told the court in Stuttgart.
Mr. Blumers has already had some success in his legal battle. Stuttgart’s regional court has promised him the right to buy 10 percent of the company’s shares. The higher regional court is now considering whether he should be able to double that and buy the 20 percent he believes he is entitled to.
One thing’s for certain: They will all end up making much more than one and a half times the starting salary of a saleswoman.
Volker Votsmeier is an investigative journalist for Handelsblatt. To contact. email@example.com