Adler Group has said its restructuring will continue as planned despite losing an appeal in the English courts on Tuesday that rejected the German real estate company’s restructuring plan, which the High Court had passed last April.
“The decision of the Court of Appeal to set aside the sanction order has no effect on the previously implemented financial restructuring of Adler Group's indebtedness as the amendments to the terms and conditions of its bonds remain in full force in accordance with German law,” said Adler.
The case has been closely watched, as Adler’s planned consent solicitation under German law for €3.1bn of its bonds was initially rejected after holders of just one of the six series of notes turned down the consent solicitation. Adler then decided to use the UK restructuring plan to impose the deal.
The restructuring plan allows creditor classes to be grouped together and then crammed down if a judge allows. In this case, the six different bonds were kept separate but the plan was still sanctioned by the court in April 2023, just days before the first series of notes came due.
That decision was seen as precedent-setting, bolstering the potential use of the UK as a venue for carrying out complex cross-border restructurings. Now, Richard Snowden said in his judgment the lower court was wrong to sanction the order.
However, since the restructuring plan was approved, Adler has paid some maturities, partially using a €937m facility pledged by a group of bondholders as part of the restructuring. It has also amended the terms of other liabilities.
“The amended bond terms have formed the basis of the Adler Group's ongoing liabilities, and the appellants in April 2023 did not apply for the appeal to have a suspensive effect on the sanction order,” said Adler.
“The implementation of the restructuring in April 2023 was carried out in accordance with German law and therefore the terms and conditions of the bonds remain valid regardless of the decision by the Court of Appeal to set aside the sanction order,” it said.
“While Adler Group respects the decision of the Court of Appeal to set aside the sanction order, the decision has no impact on the Adler Group or the effective amendments to the bond terms.”
Adler’s problems arose in 2021 when short-seller Viceroy Research questioned the group’s asset valuations sending the prices of its securities plunging.
The holdout bondholders which appealed, led by Strategic Value Partners, declined to comment ahead of a meeting on Tuesday afternoon.