Maple Bank GmbH (“Maple”) has operated in Frankfurt, Germany since 1994. The bank acted in the business areas of equity and fixed income trading, repos and securities lending, deposits, structured products and institutional sales. Maple has branches in Germany, Netherlands and Canada and subsidiaries in U.S., U.K. and the Cayman islands. It is part of the Maple Financial Group Inc., a privately held, global financial organisation based in Canada.
The German Financial Supervisory Authority (“BaFin”) filed an insolvency petition against Maple, and the Frankfurt court opened insolvency proceedings on 11 February 2016. It appointed a preliminary insolvency administrator, Mr. Michale Frege who is now responsible for managing Maple’s insolvent affairs. Maple is a member of the German Deposit Protection Fund of the Association of German Banks (“fund”). On 12 February 2016, BaFin declared Maple an indemnification case, meaning that the German deposit insurance institutions can compensate Maple’s customers.
The fund safeguards the deposits of customers of private commercial banks, up to a maximum of 20 per cent of the liable capital of the bank at the date of the last published annual financial statements. According to the BaFin announcement, the guaranteed amount in Maple’s case would be EUR 59,834,000 per Maple customer. The fund safeguards most of the liabilities listed under ‘liabilities to customers’ on Maple’s balance sheet. Among these are demand, term and savings deposits, including registered savings certificates.
The administrator will now notify all creditors of Maple (of which he is aware) of the commencement of the insolvency proceedings, of his appointment as administrator and the process for filing claims and claiming any security in the proceedings. This is particularly important for those creditors that are not entitled to compensation by the fund (e.g. creditors in relation to issued bearer bonds, securities repurchase (repo) transactions, securities lending transactions, registered mortgages (Pfandbriefe) and public registered mortgages, deposits to secure registered mortgages and public registered mortgages).
Creditors will need to file their claims with the administrator by a certain date. They will be entitled to participate in creditors’ meetings before the court, where the administrator will provide further information on the insolvency proceedings and review the claims that have been filed. Creditors will be asked to vote at the first creditors’ meeting on certain questions material to the insolvency proceedings, such as the appointments of the final administrator and of the members of the creditors’ committee.
Canada’s Office of the Superintendent of Financial Institutions (“OSFI”) took action after insolvency proceedings began in the courts of Germany. On 15 February 2016, OSFI announced that an Ontario court granted a winding-up order for Maple’s Canadian branch and named KPMG as its liquidator. Further, the administrator filed a chapter 15 bankruptcy case on 15 February 2016 in the U.S. Bankruptcy Court in New York. That followed the move by the Canadian banking regulators to take control of Maple’s assets in Canada to preserve them after an investigation in Germany found what the regulators believed to be tax-law violations, according to a statement from OSFI. In the U.S., Maple’s assets consist of cash held in banks in New York, according to court papers filed by the administrator. Chapter 15 bankruptcy is designed to protect U.S. assets of international companies from seizure by creditors while the company is dealing with its financial troubles in its home forum.
In Maple’s case, the central forum should be the courts of Germany, which opened the insolvency proceedings on 11 February 2016. Further, the bank’s sole shareholder, Maple Financial Europe SE, is domiciled in Frankfurt and is also insolvent and administered by Mr. Frege. Maple Financial Europe, in turn, is owned by Maple Financial Group Inc., which is domiciled in Toronto.
The New York court will now decide whether to issue an order of recognition that puts Maple’s U.S. assets in the German administrator’s hands.