Background
Shortly before her well-deserved pension, Anna was dismissed without notice. After more than 40 years of service, she was informed that her employer was insolvent! The Italian corporate conglomerate consisting of insurance companies, fashion companies, publishers and construction companies was filing for bankruptcy after credit lines were terminated, and follow-up financing unexpectedly failed. Thousands of people in many countries were in the same situation as Anna.
Struck by the extent of the terminations he had to administer, the insolvency administrator came up with a plan. He aimed to sue the real estate developer – a long-standing partner of the company – for damages amounting to billions. The CFO of the real estate developer had complained publicly a few months earlier at an association meeting that “the Italians” were suddenly demanding excessive advance payments from him, and that “this did not bode well”.
In addition, the real estate developer had learned that “suppliers would only deliver against prepayment, because the company’s commercial insurance was no longer valid”. He went on to say that he assumed that "insolvency of the construction companies would quickly infect the entire group, because the lack of transparency of the company structure favours valuing assets higher than their actual value".
The press picked up on the quotes, which found their way to newsstands and the smartphones of the business world. The insolvency administrator had discovered the thread leading to the end of Anna's career.
Task
REMARKABLE Investigations was engaged by the sued real estate developer’s law firm to prove that the construction company was already insolvent before the statements at the association conference.
To this end, the entire international structure of the corporate conglomerate was to be made transparent, and its financial situation presented in a comprehensible manner, and made publicly accessible.
Findings
The investigators and analysts at REMARKABLE Investigations exposed a company structure with around 700 individual companies worldwide, and proved the numerous interdependencies between the various divisions, which were actually separate entities. Furthermore, evidence of overvaluations and movements of assets within the corporate conglomerate were substantiated. Assets were repeatedly used as proof of creditworthiness for obtaining loans, although these already served as collateral for other loans in different parts of the business.
Results
Based on the information provided by REMARKABLE Investigations, the insolvency administrator concluded a settlement with the real estate developer within a few months, which represented only a fraction of the billions originally demanded, and did not affect the integrity of the real estate developer.
The detailed and accurate research carried out by REMARKABLE Investigations helped the insolvency administrator to quickly find buyers for all areas of the group of companies, and thus to remediate the insolvent estate quickly. Numerous employees whose contracts had been terminated, including Anna, were given the opportunity of secure employment until retirement by the new owners. On the basis of the findings, claims against former managers were also brought successfully by the insolvency administrator.