By Sam Tobin
LONDON (Reuters) - Adler Group SA 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 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.