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Claims Funding Europe funded litigation in the Netherlands and South Africa on behalf of investors in Steinhoff International Holdings NV (“Steinhoff”). Steinhoff is a household goods conglomerate with dual-listings on the Johannesburg and Frankfurt stock exchanges. It is now delisted.

In December 2017 Steinhoff simultaneously announced an investigation into “accounting irregularities” at the Company and the resignation of its then-CEO Markus Jooste. In subsequent announcements, Steinhoff stated that the Company’s 2017 audited results would be delayed pending further investigation, and that it’s 2016 consolidated financial statements would be restated. Later revelations made clear that the restatement of earlier years would also be required.

A subsequent investigation into Steinhoff revealed, among other things, that:

  • for years, Steinhoff executives had structured and implemented transactions that had the result of substantially inflating the profit and asset values of the Company;
  • Steinhoff entered into fictitious and/or irregular transactions with third parties that it falsely claimed were independent; and
  • Steinhoff created fictitious and/or irregular income in its holding companies and allocated that income to its underperforming operating companies.

Most of South Africa’s largest institutional shareholders—which together held more than 20% of the Company’s shares prior to the revelations of December 2017—participated in the Claims Funding Europe claim.

CFE undertook active litigation in both The Netherlands and South Africa over several years and also engaged in extended settlement negotiations with Steinhoff. Other litigation groups and shareholders were also involved in those settlement negotiations, as were financial creditors of Steinhoff.

In March 2021, four of the key litigation groups represented by litigation funders including Burford Capital, Deminor and DRRT, announced that they were prepared to accept a settlement offer that would see €370m distributed amongst shareholders in Steinhoff’s parent company.

CFE continued to negotiate on behalf of its clients and as a result of those negotiations, in July 2021 Steinhoff boosted its offered amount to this class of shareholders by 66% to €613. It remained clear that even with that increase, the proposed compensation for CFE’s clients was inadequate compared to Steinhoff’s available funds and the position of its other creditors. CFE continued its active litigation strategy in both South Africa and The Netherlands.

In August 2021, Steinhoff offered a further ZAR3.214 billion in compensation to active litigants, or approximately €189m at the then-exchange rate. At that stage CFE’s funding vehicle for the case (Hamilton) announced that it would accept the settlement.

CFE single-handedly more-than doubled the recovery on this claim from the €370m settlement pool that other litigation funders were prepared to accept for their clients, to ~€802m. When related settlements with the Steinhoff group added to this amount it is recognised by ISS Governance as the largest securities settlement of all time outside of North America.

For further information, please e-mail or call +353 (1) 571-3880.

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