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Binder Groesswang and Willkie Farr & Gallagher LLP (Frankfurt) have advised Ardian (formerly AXA Private Equity) on the acquisition of Gantner Holding GmbH, headquartered in Schruns, Austria, from the Identec Group.

Gantner is a leading international manufacturer of contactless RFID and NFC access control and staff time recording systems facilitating automatic identification. The company’s solutions can be found in leisure facilities such as fitness clubs, water parks, public pools and spas, as well as in commercial and public buildings. Gantner provides integrated overall solutions for membership and visitor management and cashless payments, as well as for high security access control (doors, cabinets and lockers) and staff time recording systems, as well as developing and producing both the hardware and the software required to run the systems. The company claims to be the market leader in the niche segment for fitness clubs in Europe, counting well-known brands such as FitnessFirst, Holmes Place, McFit, and Elements among its clients. It is also one of the three biggest companies in the public pools and spas segment. Gantner has subsidiaries in Germany, the UK, Dubai, and Australia and operates in more than 60 countries. Around a quarter of its global workforce of more than 200 is employed in R&D. 

According to a Binder Groesswang press release, as part of the transaction, the existing Gantner management team will invest in the company. “With the backing of Ardian,” Binder Groesswang reports, “management is planning to further strengthen Gantner’s leading position as a highly innovative supplier of 2/2 NFC systems and to boost growth by tapping into new markets as well as seeking bolt-on acquisitions.”

Dirk Wittneben, Head of Ardian Expansion in Germany, said: “The success of Gantner is down to its innovative products, an experienced team with excellent know-how, and long-term customer relationships. We look forward to working alongside management to build on the existing product portfolio and to provide support for the company’s international growth. Additionally, we will offer Gantner support through our international network as it moves to enter new markets.” 

Binder Grösswang advised on the Due Diligence, SPA and management participations. The firm’s team was led by Partner Thomas Schirmer, and included Partners Bernd Schneiderbauer, Johannes Barbist, Stefan Tiefenthaler, Christine Dietz,  and Angelika Pallwein-Prettner, Senior Associates Hermann Schneeweiss, Markus Pinggera, and Robert Wippel, and Associates Cordelia Klauhs, Regina Kroll, Markus Stelzl, and Sabine Apfl.

The Willkie Farr & Gallagher LLP Frankfurt team serving as International Lead Counsel of purchaser Ardian was led by Partner Mario Schmidt, and included Partners Matthew Dean, Patrick Meiisel, Jan Wilms, Susanne Zuehlke, and Maximilian Schwab.

Binder Groesswang did not reply to our inquiries about counsel for the seller.

Editor’s note: After this note was published, Binder Groesswang directed CEE Legal Matters to a source identifying Counsel for Identec as Christian Tassul from Frieders Tassul & Partner, although Tassul did not reply to a request for confirmation by CEE Legal Matters.  Based on that same source, CEE Legal Matters was able to confirm that NordLB had been advised by a Clifford Chance team led by Munich-based Partner Thomas Weitkamp, supported by Frankfurt-based Partners Kerstin Kopp and Thorsten Sauerhering, Munich-based Counsel Philipp Kropatschek, Senior Associate Matthias Toke, and Associate Christian Cranmore.

Subsequently, Herbst Kinsky announced on its website that its team advising Gantner Management was led by Partner Christoph Wildmoser, supported by Florian Steinhart, David Pachernegg, and Carl Walderdorff.

Dimitrov, Petrov & Co. has announced that it successfully defended the The Prof. Ivan Mitev Specialized Pediatric Hospital for Active Treatment EAD — one of the largest hospitals in Sofia — in a medical malpractice lawsuit.

According to the firm, the matter was “a complex medical case connected with allegations [that the hospital caused] a skull fracture during a postpartum period.”

Although few details were provided, the firm reports that “the decision of the first instance court (Sofia Regional Court) entered into force in February 2016 and shall not be appealed since the deadline for appeal has already expired.”

Serbia, as a European state on the path to European Union (“EU”) accession, must fulfill a series of conditions and obligations before being granted EU membership. The fight against corruption is one of the most significant challenges faced by Serbia and other countries of the Western Balkans in this regard.

Corruption is a complex social, economic and philosophical phenomenon that slows economic development, contributes to governmental instability and undermines democratic institutions. Combatting corruption is extremely important for Serbia, not only because of the country’s commitments towards the EU, but in order to uphold the rule of law and create an economically vibrant society that is attractive to domestic and foreign investments.

Serbia ranks 71st out of 167 states in Transparency International’s Corruption Perception Index in 2015 and 67th out of 197 states in TRACE International’s TRACE Matrix. These rankings place Serbia among countries with widespread corruption, manifested in the following forms: non-transparent privatizations, rigged public tenders, fraud, bribery and other forms of abuse of power. The aforementioned results lead to the conclusion that previous anti-corruption activities and measures have not been effective in changing the culture of corruption that exists in the country.

However, it is important to emphasize that Serbia has achieved significant progress in the past 12 years, especially in the legislative area.  But despite all the progress, there is still much work to be done. Serbia continues to lack laws that govern lobbying or influencing government officials during decision making processes. Additionally, existing laws, such as the Law on Anticorruption Agency, Law on Financing of Political Activities, and Criminal Code, are in sore need of improvement.  To move further along the path to EU accession, Serbia must address these issues.

By Milica Filipovic, Associate, Karanovic & Nikolic

Amendments to the Austrian Code of Criminal Procedure bring substantial improvements to defendants’ rights, but also facilitate the public authorities’ access to confidential bank data.

We have prepared a series of Legal Insights to inform you about these amendments: (i) Part 1 – Amendments regarding the Attorney Client Privilege (published on 31 March 2016); (ii) Part 2 – Improvements to Defendants’ Rights (published today); and (iii) Part 3 – New Rules regarding the prosecution authorities’ access to bank data (published on 14 April 2016). 

1. Better access to a lawyer in case of an arrest

After having been arrested, an arrestee must be transferred to the custody of the competent court within at least 48 hours. After having been transferred to the court prison, the arrestee must be questioned by an investigative judge within 24 hours. At this initial hearing, which is not a trial and which normally takes place within the court prison, the investigative judge informs the arrestee of the offence he is suspected of having committed, and asks the suspect whether he pleads guilty or not guilty. After the initial hearing, the investigative judge decides whether the arrestee should be remanded to custody pending investigation and trial, or be released with or without bail or other security. Up to now, the police, as well as the public prosecutor, could rather deliberately monitor and limit a defendant’s contact with his or her attorney during these first very important hours of an arrest. As of 1 November 2016, this will have to stop, as Austria has implemented Directive 2013/48/EU, which lays down certain minimum rules concerning the right of access to a lawyer in criminal proceedings.

Pursuant to the newly drafted sec 59 of the Austrian Code of Criminal Procedure, the contact between an attorney and his or her defendant may no longer be monitored. Further, limiting communication between the defendant and his attorney will only be permissible in exceptional cases, for instance if the prosecuting authorities can show reasonable grounds as to why a defendant’s contact with an attorney might hamper the investigation. The police must provide the defendant with written reasons within 24 hours after his or her arrest. The decision of the police to limit a defendant’s access to his or her attorney can be appealed by the defendant (please see our Legal Insight dated 31 January 2014 for further details: Austria: New legal remedy against police activities within criminal investigations).  

2. Improvements regarding interrogations

In addition to the possibility to deliberately limit a defendant’s right to consult with an attorney prior to his or her hearing, the role of the attorney during the interrogation was restricted to the right to ask additional questions at the end of the hearing.

As of 1 November 2016, the authorities are explicitly requested to wait on the arrival of an attorney. Upon the attorney’s arrival, the defendant must be granted enough time to consult with his or her attorney prior to the interrogation. Furthermore, the attorney will be permitted to ask “additional questions” not only at the end of the hearing, but after each thematically separate “section” of the interrogation. This right to ask questions during the course of the interrogation will be of particular importance during complex interrogations regarding various subjects, as it will not only lead to more structured protocols, but will also provide the attorney with the opportunity to step in more frequently. Most importantly however, the attorney will finally be permitted to record “statements” regarding the course of the interrogation, ie, that the translator did not fully understand the defendant and/or that he or she was not granted sufficient time to consult with the defendant.

By Klara Jaros, Attorney at Law, Schoenherr

The 2014 collapse of the Corporate Commercial Bank (ranked 4th in the country) raised doubts about the accuracy of the overall liquidity ratio (34.80%) and asset value (approx. EUR 44.07 billion) of the banking sector in Bulgaria, not least because assets had been evaluated according to the internal rules of the respective credit institutions.

The implementation of the EU Bank Recovery and Resolution Directive (BRRD) alongside the high ratio of non-performing loans (NPLs) triggered the Bulgarian National Bank (BNB) to push for significant reforms.

HOLD STRATEGY

Despite the high level of NPLs in Bulgaria, above 16% of total gross loans, as assessed by the International Monetary Fund in its Global Financial Stability Report of April 2015, disposals have been slow to start for various reasons, not least the pricing gap between the book and market value of the collaterals. Banks were reluctant to seek effective divestments, preferring to transfer the NPLs to related companies instead of bringing them to the market and suffering losses.

REGULATORY CHANGES

In August 2015, Bulgaria introduced the new European bank resolution regime by transposing the BBRD. This resulted in significant legislative changes enabling early, preinsolvency intervention on the part of the BNB into the management and operations of a bank when it is threatened by a failure. Consequently, in October 2015 the BNB published a Plan on Reforms and Development of Banking Supervision. It established a Banks Restructuring Department which is empowered to intervene in financial institutions with high risk of destabilization. The BNB has firmly stated the necessity of implementing the 2012 Basel principles and the European Banking Authority’s Manual on Common Procedures and Methodologies for the supervisory review and evaluation process in the new regulatory framework.

The first step in executing the reforms was the initiation of the AQR review of Bulgarian banking institutions (22 out of 28 banks operating on the local market). Following the selection of a third-party, external advisor, which was mandated by the adaptation of the ECB methodology, the local banks completed the preparatory stage of the AQR exercise by appointing AQR auditors. The next stages in the AQR process will involve stress test completion in July, AQR review completion in August, and implementation of AQR measures from September onwards.

EXPECTED OUTCOME IN BULGARIA

NPL’s tie up bank capital that could otherwise be used to increase lending. They reduce bank profitability, damage external credit ratings and funding costs. Therefore, given similar regulatory reforms, the banks in CEE & SEE have begun actively to deleverage their NPLs, in some cases with government support. The government of the Republic of Slovenia established a Bank Asset Management Company to acquire NPLs after the AQR in Slovenia, thus following Western Europe’s pattern of “bad” bank structures. Another example of the government support has been seen in Austria with the establishment of the Heta Asset Resolution (formerly Hypo Alpe-Adria International), which established a new precedent in implementing the new European banking resolution regime. In Romania, the growing burden of the NPL’s on banks’ balance sheets expedited their disposal.

Government intervention in the banking sector is not new for Bulgaria, where a Banking Consolidation Company operated in the early 90s, although at that time with the predefined purpose to facilitate privatization. We anticipate that the developments in Bulgaria will be closer to the Romanian model. The AQR will determine whether the valuation of the reviewed banks’ assets is market consistent. This will guide the bid/ask positions to a large extent. As a result, a more vigorous NPL restructuring process will be triggered. Indeed, we have seen the first results in terms of large scale portfolios being brought to the market. We see an increasing appetite from investors and growth in experience with local transaction among the NPL servicers, leading us to expect that the disposals will accelerate in the next few months.

WHAT WILL BE THE EFFICIENT SOLUTION?

Whether the AQR will result in direct sales of NPL’s or whether a more complex structure will be required depends on numerous factors. From an investor perspective, one of the key value determinants is the speed with which they can start working with the acquired portfolios. The detection and resolution of legal impediments is therefore an early action in the acquisition process. In our Banking and Finance practice at Wolf Theiss, we have structured loan acquisition vehicles which have been used successfully for NPL transactions. This has proven to be one of the efficient solutions for key distressed assets or NPL portfolio disposals. Notwithstanding certain legislative debt acquisition constraints in Bulgaria, the setup of this kind of company represents a profitable undertaking which provides banks and investors with significant benefits, given the opportunity to improve loan management and to share dividends from the company. Such a structure would further overcome any long and rather inefficient collection and enforcement procedures and may also serve as platform for attracting co-investors for larger portfolios.

In addition, the expected amendment will alter the scope of investment of the REIT companies in Bulgaria such that they can invest in and consequently securitize loans which are subject to judicial dispute. Similar structures led to rapid expansions of NPL portfolios sales in Poland where the banks selling them to securitization funds were additionally incentivized by exemptions from taxation and licensing. Simultaneous legislation changes are continuing, which are intended to prioritize rehabilitation over liquidation in the insolvency process and thus overcome some of the hurdles in voluntarily restructuring. Therefore, as a result of these regulatory improvements, the flexibility of NPL portfolios investment schemes might be enhanced.

By Katerina Kraeva, Partner, and Richard Clegg, Partner, Wolf Theiss

Sources used: BNB, International Monetary Fund and its Global Financial Stability Report 

RTPR Allen & Overy has successfully represented Tymbark Maspex in a challenge of a fine levied by the Romanian Competition Authority against food retailers Metro, Selgros, Real, and Mega Image, and 20 of their suppliers for alleged anticompetitive vertical agreements related to promotional sales.

According to RTPR Allen & Overy, the Romanian Competition Authority, via a sanctioning decision of April 2015, levied a fine against the retailer and suppliers totalling approximately EUR 35 million. 

RTPR Allen & Overy was successful in the first instance court in its attempt to have the fine for Tymbark Maspex annulled, “on a legal argument,” according to Partner Valentin Berea, “related to the correct application of the law in time and the interplay between Romanian and EU law when both the local norms and article 101 of the TFUE are allegedly infringed.”

The ruling is not final, and the firm expects the authority to appeal. The court’s judgment does not apply to the other challenges to the sanctioning decision by the other suppliers and retailers.

The Warsaw office of Hogan Lovells has advised Union Investment Real Estate GmbH on its acquisition of the Ferio Konin shopping center in Poland from Rockspring Property Investment Managers. Dentons was legal advisor of Rockspring on the deal.

Ferio Konin was completed in 2008 by developer RE Project Development, which subsequently sold it in 2010 to Rockspring for EUR 47.2 million. It consists of a shopping center and retail park with 74 units and 35,585 square meters of retail space, which was extended in 2013/2014 by an additional 2,500 square meters, at which time the central food court was remodelled. The mall is located 5 km from the Konin town center on the Warsaw–Berlin motorway. Hogan Lovells reports that “it will soon receive a BREEAM certificate at the ‘Very Good’ level,” and claims that “Ferio Konin is the dominant retail center in the city.”

The Hogan Lovells team advising Union Investment Real Estate was supervised by Partner Jolanta Nowakowska-Zimoch and led by Senior Associate Justyna Milewska, assisted by Lawyer Joanna Fidecka.

The Dentons team advising Rockspring Property Investment Managers was led by Partner Tomasz Stasiak, assisted by Senior Associate Irona Huryn.

Dentons has advised its long-standing client Expobank on the successful acquisition of CJSC The Royal Bank of Scotland in Russia (“RBS Russia”) from the Royal Bank of Scotland group. Clifford Chance advised the Royal Bank of Scotland on the deal, which was originally signed in November 2015, and which closed in April 2016 after receiving all necessary regulatory approvals.

According to Dentons, “Expobank is one of the top privately-owned banks in Russia and has been active in pursuing mergers and acquisitions in the financial sector.”

Dentons has previously advised Expobank on several other M&A transactions, including its 2014 acquisition of LBBW Bank CZ in the Czech Republic (reported on by CEE Legal Matters on September 4, 2014) and an acquisition of VR Leasing, West LB, Barclays Bank, Santander Consumer Bank, and City Mortgage Bank in Russia. 

The Dentons team was led from Moscow by Partner Alexei Zakharko and Senior Associate Vladislav Bromberg with the assistance of Of Counsel Mark Withey.

Clifford Chance did not reply to our inquiry about its involvement in the matter.

Imagesource: tupungato

A team of 16 lawyers from Tark Grunte Sutkiene in Estonia has announced that they are splitting off from their former firm and will be operating going forward as TGS.

The new firm was founded by long-term Tark Grunte Sutkiene Partners Hannes Vallikivi (who will serve as Managing Partner of the new firm), Erki Kergandberg, Toomas Taube, Margo Lemetti, Piret Blankin, and Rolan Jankelevits. In addition, according to an announcement issued by the new firm, Elmer Muna and Andres Siigur were promoted to the Partnership.

In that announcement, new TGS MP Vallikivi said that the split from Tark Grunte Sutkiene was necessary “to apply the latest practices in managing and developing the law firm when advising leading businesses in Estonia. The easiest way to do that was to found a new law firm with lawyers having a similar mindset.”

He continued: “On the one hand, the profession of a lawyer is a conservative one, having a high repute in society and serving a specific purpose – it helps to ensure that all members of society are equal before the law. On the other hand, our profession is constantly changing and we must be the ones who are the quickest to turn our eyes to the direction where our clients are looking. We must listen to our clients. That was the principle based on which we created the new law firm by such a great number of top lawyers – we look towards the same horizon our clients have turned their eyes to.”

TGS’s launch comes only days after news broke that former Tark Grunte Sutkiene Partners Rene Frolov and Risto Vahimets, who headed the firm’s Estonian Competition and M&A practices, respectively, had left the firm to join Raidla Ellex and Fort, in turn (as reported by CEE Legal Matters on April 1 and April 8, 2016). 

Better late than never

To date Bulgaria has never adopted measures to regulate how allergens in non-prepacked foods, and other mandatory information (set out in Article 9 of Regulation (EU) No 1169/2011 on the provision of food information to consumers (“FIR”)), should be disclosed to consumers. The same applies to how this information should be presented and expressed.

According to the Bulgarian Food Safety Agency (“BFSA”), there is a draft local ordinance in the pipeline which is the subject of discussion between the Ministry of Agriculture and Food, and the Ministry of Health. Until its adoption, non-prepackaged foods are required by BFSA to have only the mandatory allergen information disclosed in writing.

On 17 March, 2016 the long-awaited draft local ordinance (secondary law) was published for public discussion. It envisages regulating two aspects of the national labeling requirements, namely the labelling of non-prepacked foods, and the voluntary indication of the Bulgarian origin of the foods.

Labelling of non-prepacked foods

The published draft provides that persons placing the following on the market: (i) non-prepacked foods, including non-prepacked foods that are the subject of distance selling; (ii) foods supplied by mass caterers; (iii) foods intended for sale to mass caterers; and (iv) foods prepacked for direct sale, must provide the listed information below to consumers:

1. any ingredient or processing aid listed in annex II of FIR, or derived from a substance or product listed in annex II of FIR which are allergens or can cause intolerance, used in the manufacture or preparation of a food and which is/are still present in the finished product, even if in an altered form;
2. the name of the food; 
3. the additional information set out in annexures III and VI of FIR, where applicable; 
4. the name or business name and address of the food business operator referred to in art 8 para 1 of FIR; 
5. the date of minimum durability/the “use by” date, in accordance with art 24 and annex 10 of FIR. 

The requisite information has to be written clearly and accurately in Bulgarian, in a manner which is easy to understand for general consumers.

Considering the current controversial national legislation on the labeling of alcoholic beverages, the draft explicitly provides that for alcoholic beverages with a min 1.2% and max 15% alcohol percentage, the particulars under art 9 of FIR must be set out, with the exception of the nutritional content information.

Country of origin labelling 

The bill specifies the conditions subject to which food can be voluntarily labeled as “Made of Bulgarian raw materials” and/or “Made in Bulgaria”.

When food is obtained from primary production, it can be labeled with “Made of Bulgarian raw materials” if the raw material was obtained entirely in Bulgaria, including as a result of hunting or fishing of wild game.

Foods that are not obtained as a result of primary production can be identified as being “Made of Bulgarian raw materials” if (i) a min 75% of their ingredients are produced in the territory of Bulgaria, and (ii) all stages of their production take place in Bulgaria.

“Made in Bulgaria” can be specified only for food where all production stages are carried out in Bulgaria, despite the origin of the ingredients used.

Both designations of origin can be expressed with words or through images of the Bulgarian map or other appropriate symbols.

According to the Ministry of agriculture and food, the purpose of the voluntary indication of the origin is to stimulate Bulgarian production through provision of information which may help consumers to choose products made/obtained in Bulgaria.

By Elena Todorova, Attorney at Law, Schoenherr