IVG insolvency plan gets legal go-ahead
A German court has now approved the insolvency plan proposed by erstwhile German heavyweight IVG Immobilien AG, paving the way for an orderly insolvency and a €2.2bn debt reduction programme. The company will be delisted from the stock exchange in the course of the summer.
The move marks the end of an 11-month campaign by disgruntled former shareholders to salvage some value for themselves, and sees previous bondholders becoming the new owners of what was once Germany’s largest real estate company.
Effectively, the Bonn Regional Court rejected the complaints filed against the plan by subordinate investors and shareholders in the final instance, and denied further appeal against the decision. The plan will reduce the company's debt by around €2.2bn, primarily in the form of a debt-to-equity swap in which existing IVG Immobilien AG creditors will exchange their receivables for newly-issued shares.
It also splits the company into three separate and independently operating companies: IVG Immobilien AG (portfolio management business), IVG Institutional Funds, and IVG Caverns. A new company will be installed above these businesses specifically to hold their shares.
The shareholders of this holding company will be the present creditors of IVG Immobilien AG. Hans-Joachim Ziems, board member responsible for the restructuring, expects the implementation of the plan and the closing of the insolvency proceedings during the current quarter. Ziems said in a statement, “The lengthy and intensive negotiations with our capital providers have paid off…Moreover, under difficult conditions in some cases, IVG’s employees have demonstrated their perseverance and commitment, helping to return the company to a solid financial footing and make it operationally fit for the future.”
From next quarter onwards, Ralf Jung, former CEO of Allianz Alternative Assets Holding and former management board member of Dresdner Bank, will become CEO of the newly-formed IVG Group.
The surviving group expects to still have about 80% of its previous staff numbers at 320 people, but the last remaining board member of the previous regime, COO Guido Pinol, is following CFO Hans Volkert Volckens and CEO Wolfgang Schäfers out the door by the end of the summer, along with several top managers from the IVG Institutional Funds division.