It is a familiar refrain from many a rating agency analyst: you cannot structure against fraud. And the insolvency for which German toy firm Nici AG filed on May 16 looks like it might be just that – director and founder Ottmar Pfaff has resigned amid rumours of accounting irregularities and unauthorized payments.
The development is bad news for two recent SME securitizations that reference the company: Commerzbank’s A199.5 million CB MezzCap transaction, which was signed in March, and Capital Efficiency Group (CEG)’s Preps 2004-2 SME CLO (which has already been hit by payment errors).
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