The loyalty shown by soccer club Bayer 04 Leverkusen to its sponsor Teldafax has proven to be very costly. The top-flight team is being forced to pay €13 million to the bankrupt energy company’s insolvency administrator after being caught out by a law that states it should have seen the bankruptcy coming, sources have told Handelsblatt.
The Teldafax insolvency in 2011, which Handelsblatt helped to uncover in 2010, was one of the biggest in Germany. The largest provider of cheap energy in Germany was effectively run as a Ponzi scheme and left €500 million ($573 million) in debts in 2011. The German government has already paid out €100 million in compensation for failing to identify the insolvency earlier.
The firm’s insolvency administrator, Biner Bähr, has been determined to get back money for clients who lost it and the soccer club has now become one of the victims as a result of Germany’s insolvency law.
The settlement ends a bitter controversy spanning more than two years.
It states that once a company sees a business partner is headed for bankruptcy, it must return any payments received after that point. A regional court ruled Bayer 04 should have known in 2009 that Teldafax was ripe for ruin and it ordered the club to return all the millions it had been paid after that point.
The soccer club and administrator have recently agreed to the €13 million sum in a compromise settlement at a Cologne court. It confirmed there is an agreement, but did not reveal the amount. Information from sources close to the negotiations, however, said Bayer 04 agreed to pay €11 million plus €2 million in interest.
The settlement comes at a difficult moment for Bayer Leverkusen. Last week, the team was beaten 1-0 by Lazio of Rome in a qualification game for the European Champions League. If it does not win well in the second leg this week, it will lose out on €20 million.
Meanwhile, its medical team on Friday announced Charles Aranguiz, the Chilean national player who recently joined the team at a cost of €12 million, will miss months of play because of a torn Achilles tendon.
The Teldafax settlement ends a bitter controversy spanning more than two years. Since the liquidator sued Bayer in April 2013 for €16 million at the Cologne court, the club has put up stiff resistance. It rejected a compromise of €7.3 million proposed by the court, which by October 2014 had doubled as the court decided the soccer club was obligated to pay €16 million.
Bayer appealed but at the Higher Regional Court the battle continued along similar lines. Shortly before a verdict was to be announced, the club reached an agreement with the insolvency administrator Biner Bähr from the law firm White & Case.
The legal battle dates back to August 2007, when Teldafax agreed to pay €6 million sponsorship per season to Bayer 04. But the link soon became a liability.
Teldafax financed itself with a prepayment model. Yet when tens of thousands of customers complained they weren’t getting their money back, Bayer Leverkusen remained true to the sponsor.
Even as liquidators pursued their investigations at Teldafax and Bayer Leverkusen repeatedly complained of unmade payments, no words of condemnation came from any top officials at the soccer club.
It was thought that Teldafax executive Michael Josten, a convicted fraudster, was running the pyramid scheme from prison.
The team’s players continued to don the Teldafax logo for months more. Finally, just three weeks before Teldafax filed for bankruptcy in 2011, Bayer Leverkusen canceled the sponsorship contract, but it was too late to limit the damage.
Jürgen Flauger covers the energy market for Handelsblatt. Sönke Iwersen leads Handelsblatt team of investigative reporters. To contact the authors: firstname.lastname@example.org and email@example.com