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Freshfields denies wrongdoing in tax advice amid €50m settlement payout

Freshfields Bruckhaus Deringer has brought to an end a lawsuit brought against the firm by the liquidator of the insolvent Maple Bank with a €50m settlement payment.

The settlement came to light on Thursday (29 August) at a creditors’ meeting when the liquidator, Michael Frege of CMS, said he had recovered €50m for creditors to settle a €95m claim against the Magic Circle firm brought in April.

The case centres on Freshfields’ advice to the German arm of Maple Bank over controversial ‘cum-ex’ transactions, which employed allegedly fraudulent taxing of dividends to benefit from multiple refunds on tax payments. The deals were outlawed in 2012 but not before numerous financial institutions including BNY Mellon, Deutsche Bank and Société Générale were caught up in the scandal.

Last year a series of raids were carried out by state prosecutors on the Frankfurt offices of Freshfields in connection with the Maples Bank mandate. In November 2018, it emerged that two of the firm’s partners were the subject of a criminal investigation into their role in the scandal.

Freshfields said in a statement: ‘A dispute regarding a potential liability claim stemming from a mandate completed several years ago has been resolved. The parties have agreed after intensive discussions that not only the claim for payment of €95m, but also additional claims, will be withdrawn. We are convinced that our advice always complied with applicable law.’

A spokesperson for CMS told Legal Business: ‘German insolvency proceedings are non-public. Thus, we are not able to provide any further information on this matter. However, as already reported in the press, we can confirm that a settlement has been reached with the amount stated.’

Michael Weigel, litigation partner at Arnold & Porter in Frankfurt, acted for Freshfields and Linklaters advised Frege on behalf of the creditors of Maple Bank.

For more on Freshfields, see our cover feature ‘‘The devil you know – The two visions for Freshfields’ (£)