Kinowelt co-founder Michael Koelmel has been arrested by Munich police, just three days before his Euros 32m acquisition of the insolvent Kinowelt Medien Group is due to go through.
According to a report in the German daily tabloid newspaper Bild Zeitung, Koelmel has been taken into custody because of an "insolvency offence" and the risk that he might make a sudden exit from the country. He was arrested on Monday, October 28 and was due to appear before magistrates on Tuesday.
Kinowelt Medien spokesperson Christin Wegener said that "no comment will be forthcoming from the company's corporate communications on this matter". She also declined to make any comment on the reasons given for Michael Koelmel being taken into custody.
Munich based Kinowelt filed for insolvency protection in May. At the beginning of October, insolvency administrator Wolfgang Ott struck an agreement with Michael and brother Rainer Koelmel that would allow them to acquire the company's core assets again for Euros 32m.
The plan envisioned the creation of a new company concentrating on the core activities of license trading, theatrical distribution and home entertainment.
Ott indicated in a statement on October 7 that the acquisition agreement would come into effect on November 1 assuming that the full purchase price was paid on October 31.
However, this latest twist in the never-ending Kinowelt saga throws the Koelmel brothers' comeback and the creation of a new company to operate the core activities into serious doubt. As one Frankfurt stockmarket trader commented to the online service of Financial Times Deutschland on Tuesday, "the arrest is a rather sudden set-back for the restructuring. That could mean the final end for the company. The investors' confidence is, in any case, gone."
The latest developments were also reflected in Kinowelt's share price which had already fallen by around a third on Monday and slipped by another 29% on Tuesday morning to 17 cents once the news had broken.