FRANKFURT, Germany (Reuters)—Porsche SE and several hedge funds seeking damages from the Stuttgart-based financial holding agreed on Thursday [Jan. 31] that New York was the wrong place to pursue compensation, and left the door open to bringing a case in German courts.
Porsche said it continued to believe that claims made against it are without merit, but signaled that legal woes tied to its botched takeover of Volkswagen are not yet over.
“Porsche SE has agreed not to raise any statute of limitations defense with respect to claims filed by Plaintiffs before a court in Germany within 90 days,” Porsche said in a statement on Thursday.
In February and March 2011, 26 global hedge funds sought damages of more than $1.4 billion from Porsche, alleging fraud and unjust enrichment in the New York State Supreme Court in connection with its transactions with respect to Volkswagen shares in 2008.
Hedge funds including Glenhill Capital LP, David Einhorn’s Greenlight Capital LP and Chase Coleman’s Tiger Global LP had accused Porsche of causing more than $1 billion of losses by cornering the market in VW shares during a botched takeover.
The funds accused Porsche of engineering a “massive short squeeze” in October 2008 by quietly buying nearly all freely traded ordinary VW shares in a bid to take over the company, despite having stated it had no plans to take a 75 percent stake.
When Porsche revealed it had amassed control of roughly three-quarters of VW, shares of VW soared, briefly making the Wolfsburg-based carmaker the world’s biggest company by market value. The surge caused losses for hedge funds that had bet on a decline in the stock price.
On Dec. 27, 2012, the Appellate Division of the New York State Supreme Court held that New York is not an appropriate forum, but left the door open to an appeal.
Porsche is still being sued for $2 billion in a separate case brought by other hedge funds in another U.S. court.