50,000 investors are currently afraid of losing parts of their fortunes because of the insolvency of P&R (PR Insolvency), a Munich container investment company.
What happened in the PR Insolvency?
A lot of investors were shocked when P&R announced on their website on March 7 that no more investments were possible anymore. This started off a wave of speculations about what could have happened. It now seems to be clear that P&R’s system of acquiring money has badly failed which led to the final bankruptcy.
How did P&R’s system work?
Basically, the investment company sold shipping containers to investors which were then rented back from the investors in order to gain profit:
- An investor (e.g. Mr. Smith) concludes a purchase and rental contract with P&R Transport-Container GmbH.
- Smith becomes the owner of the purchased containers.
- At the same time ‘P&R Transport-Container GmbH’ rents the containers from Mr. Smith.
- ‘P&R Transport-Container GmbH’ does not have the purchased containers in stock but purchases them from the Swiss Sister-Company ‘P&R Equipment & Finance Corp.’ Between these two companies a general agreement is set up.
- These two P&R Companies now conclude a sublease agreement.
So Mr. Smith is now the owner of the container. ‘P&R Transport-Container GmbH’ leases the container from Mr. Smith. ‘P&R Equipment & Finance Corp.’ subleases the container from ‘P&R Transport-Container GmbH’. ‘P&R Equipment & Finance Corp.’ now rents the container out to other companies like Textainer, Dong Fang or Seacube and so gains further profit.
Additionally, P&R guaranteed that they would repurchase the sold containers to a price worth 65% of the selling price.
What went wrong?
Most investors were certain that this system is absolutely safe and trustworthy because it is rather simple, has worked for more than 40 years and has gained profits of approx. € 3.5 Billion. But something must have gone wrong. Finance experts and analysists state that P&R was not able to gain the profits necessary to keep the system profitable without being dependent on the money of new investors.
In the past three years P&R lost nearly half a Billion Euros because they had to pay the investors’ rents using company capital and not money they earned renting out their containers.
Furthermore, many five-year deals are expiring this year which means that P&R would have to pay up to € 650 Million while only having sold containers worth € 442 Million.
All this led to the insolvency of the company.
What can investors do and are there even more risks than not getting payed?
Of course, Mr. Smith will now be wondering what he will have to face in the upcoming time. The following might help to get a first impression on what could happen.
Should investors be afraid of facing further costs?
Not only could Mr. Smith could lose all the money he invested but is facing more risks: He would be liable for his containers to the point of “private insolvency.” After P&R’s failure, shipping lines or ports around the world could saddle him with storage or recycling costs.
So, it seems that immense costs might be waiting for investors after the P&R insolvency. What can they do?
Damages from P&R?
Is it possible for Mr. Smith to get any damages from P&R itself?
Probably not. Due to the company’s insolvency it is extremely hard if not impossibly to get any damages from the company anymore.
Damages from auditors?
One possible way might be trying to receive damages from auditors or financial advisors who could have not fulfilled their duties of checking the company’s financial status or advising possible investors correctly.
Damages from ‘BaFin’?
One more way of getting damages could be by asserting claims against ‘BaFin’, the so called “Bundesanstalt für Finanzdienstleistungsaufsicht” (Federal Financial Supervisory Authority). This agency is responsible for keeping upright a trustworthy financial system and for supervising the financial markets in Germany. They should have noticed that P&R was selling far more containers than they had in stock, which also makes the whole affair look like a snowball scheme only relying on the money of new investors.
Who is going to help?
We – SYLVENSTEIN-Lawyers – represent and advise many investors in the PR Insolvency and offer a broad range of actions. Next to claims arising from the liability of public authorities our specialist lawyer for financial law check claims for damages against certain financial advisors. We also keep contact to potential purchasers of claims who are willing to offer you a fair price for your claims.
We offer you a by our specialist lawyers. Up to now we have taken care of several hundreds of investors in connection with direct investments concerning ship containers. Contact us now, for free: