Adler Group asks UK court to approve restructuring plan to avoid collapse

Adler SA

03/04/2023 12:31

By Sam Tobin
       LONDON, April 3 (Reuters) - Adler Group SA  ADJ.DE 
asked a London court on Monday to approve a restructuring plan
to prevent the German property firm's imminent collapse into
insolvency.
    One of Germany's biggest landlords, Adler is fighting a
liquidity crisis triggered by a downturn in the German property
market, rising energy and building prices caused by Russia's
invasion of Ukraine and the impact of the COVID-19 epidemic.
    Its troubles also follow allegations made in 2021 by short
seller Viceroy Research that the company's balance sheet had
been artificially inflated, accusations which Adler rejected at
the time.
    Adler Group has external debts of more than 6 billion euros
($6.5 billion), but has secured new financing of 938 million
euros as part of a planned restructuring.
    The plan involves amending the terms of unsecured notes
which mature between 2024 and 2029, with Adler's indebtedness
under the notes transferred to an English subsidiary, AGPS
Bondco plc.
    Daniel Bayfield, AGPS BondCo plc's lawyer, said in court
filings that Adler Group faces "a critical liquidity shortage"
and that its subsidiary Adler Real Estate AG  ADLG.DE  is unable
to pay a 500 million-euro debt due later this month.
    Adler Group, Adler Real Estate and other group companies are
"likely to enter into formal insolvency proceedings by the end
of April" if the plan is not approved, he added.
    A group of creditors which hold notes that mature in 2029
oppose the plan, however, and have said in written arguments
that they would be "better off with a formal liquidation".
    Tom Smith, representing the opposing creditors, said it was
unfair that the holders of notes which mature in 2024 had the
greatest security under the plan when they are taking the lowest
level of risk.
    The hearing at London's High Court is expected to take three
days and it is not known if the court will rule on approving the
plan on Wednesday or at a later date.

 (Reporting by Sam Tobin; editing by Jason Neely)
 ((Sam.Tobin@thomsonreuters.com;))