LONDON (Reuters) -German property firm Adler Group SA's restructuring plan to prevent its collapse should not have been approved by a London court, the Court of Appeal ruled on Tuesday, throwing the future of the embattled company into doubt.
The news sent shares in Adler tumbling by up to 30% before they recovered some of the losses.
The restructuring plan – designed to help service external debts of approximately 6 billion euros ($6.5 billion) – was approved last year despite opposition from some bondholders.
That decision was overturned on appeal, which Adler Group said in a statement would have no effect on its previously implemented financial restructuring.
Adler has been 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 pandemic.
It also came under increasing scrutiny after short seller Viceroy Research alleged in 2021 that the company's balance sheet had been artificially inflated, accusations Adler has rejected.
Under the restructuring plan, the company would borrow around 938 million euros of new funding and the terms of unsecured notes that mature between 2024 and 2029 would be amended.
A group of creditors holding notes that mature in 2029 – including investment firms DWS Investment GmbH and Strategic Value Partners – had opposed the plan, saying they would be better off if Adler Group were formally liquidated.
The High Court authorised the plan in April but Judge Richard Snowden said in a written ruling on Tuesday that the lower court was wrong "to impose the plan on the dissenting class of 2029 noteholders".
($1 = 0.9187 euros)