Creditors May go After BenQ

True to the saying "when it rains, it pours," BenQ Corp. could find itself being sued by creditors of its failed mobile-phone venture in Germany.

At a meeting in Munich on Wednesday, insolvency administrator Martin Prager said around 4,350 creditors of bankrupt BenQ Mobile GmbH & Co. OHG filed claims amounting to more than €1.2 billion (US$1.6 billion) and have asked him to examine whether they could require the Taiwanese parent company to meet their demands.

Prager, in a statement, referred to the issue as "extraordinarily complex."

The possibility of BenQ Mobile creditors going after BenQ Corp. adds to a growing list of setbacks for the Taipei manufacturer.

On Tuesday, Chairman K.Y. Lee offered his resignation over losses caused by the company's inability to make its former German mobile phone subsidiary profitable. Even though BenQ's board of directors refused to accept the offer, pressure on Lee to turn around the company remains high.

A week earlier, Taiwanese prosecutors raided the company's offices and hauled away three executives for questioning over alleged insider stock trading related to when it revealed losses incurred from BenQ Mobile. The Taoyuan District Prosecutor's Office alleges that some company executives sold shares of stock ahead of announcing a loss in the first quarter of last year, caused by troubles related to its takeover of BenQ Mobile. BenQ's share price plunged after the announcement.

Prager estimates the total assets of BenQ Mobile to be around €300 million, far below the group's demands and even possibly not enough to cover remaining personnel and legal costs.

Of the 4,350 creditors who have filed claims, more than 3,500 are former employees, seeking up to €27 million in compensation.

Attempts earlier this year to find an investor for bankrupt German mobile-phone maker failed, resulting in negative publicity for both Siemens AG and BenQ.

In June 2005, Siemens agreed to sell its money-losing mobile phone manufacturing business to BenQ, due to disappointing world sales of its handsets and high product costs. But in August 2006, the new owner announced plans to cease investment in the German sites after concluding they were uneconomic.