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Robert Trigaux

Why a Tampa company wants payments denied by Hitler's Germany

17

August

hitlerheil.jpgWake up and good morning. You don't usually see a reference to Adolf Hitler in a blog about Florida business, so this is an unusual posting. It seems a Tampa company called World Holdings LLC that says it owns a "significant number" of $208 million in bonds sold to U.S. purchasers following World War I. The company was rebuffed when it sought repayment by the German government, so in a lawsuit originally filed in Miami, World Holdings seeks "hundreds of millions of dollars."

According to this Bloomberg story, Germany sold the bonds to finance rebuilding following the conclusion of the war. By the mid- 1930s, after Hitler became chancellor, Germany had stopped making payments on the bonds in the run up to World War II.  World Holdings controls a large number of so called "Dawes" and "Young" bonds sold to U.S. purchasers and is charging Germany with breach of contract based on the country's alleged default of its obligation to pay the outstanding principal and accrued interest on these bonds. The lawsuit seeks damages in the amount of outstanding principal and accrued interest.

Earlier this month, a federal appeals court in Atlanta  ruled that Germany isn't immune from the claims and that American courts have jurisdiction to decide whether the bonds are enforceable. Attorney Michael Elsner represents World Holdings while attorney Gerald Houlihan is counsel in the case -- World Holdings LLC v. The Federal Republic of Germany --  for the German government.

 

Under a 1953 treaty, the Bloomberg story says, the bondholder must show the bonds were held outside Germany as of Jan. 1, 1945, to ensure repayment. World Holdings claims it does not need to meet that standard because it did not originally accept the terms of the London Debt Agreement, also completed in 1953, which aimed to settle most of Germany’s pre-World War II debt. Germany counters that World Holdings hasn’t contacted the country’s examiners with any request to validate the bonds. The appeals court acknowledges it may still find that World Holdings’ failure to comply with the validation requirement could deem the bonds worthless.

World Holdings, state documents show, was incorporated in 2007 by Cory A. Thomason and Eugene E. Thomason at 17916 Cachet Isle Drive in Tampa.

-- Robert Trigaux, Times Business Columnist

 

 

 

[Last modified: Tuesday, August 17, 2010 8:52am]

    

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