Insolvent "Gherkin" owner IVG to restructure with court consent
FRANKFURT Nov 1 (Reuters) - A German court started insolvency proceedings for the co-owner of London's landmark Gherkin tower, German property group IVG Immobilien, which will continue to reorganise under its own administration.
IVG plans to submit a plan for its reorganisation to the court prior to Christmas and schedule a vote for its creditor committee in January, the company said on Friday.
Should both agree to the plan, which would likely involve a debt-for-equity swap, it could exit the insolvency proceedings in the first half of next year as planned.
One of Germany's best known real estate firms, IVG amassed over 4 billion euros ($5.5 billion) in debt during a rapid expansion when it financed a business-and-hotel complex located at the Frankfurt airport called "The Squaire".
It was also hit by growing unwillingness among European banks to provide new credit as new regulations force them to reduce their exposure to property.
After a debt-for-equity swap that would have wiped out existing shareholders failed to win support from enough creditors, the company decided it could no longer remain a going concern and sought protection from creditors in August.
Later that month a court in Bonn approved its application to reorganise itself under the new restructuring process, appointing insolvency expert Horst Piepenburg only as a preliminary trustee without any authority to make decisions rather than as a formal administrator.
"We have been able to use the time during which we were protected (from creditors), in order to create the prerequisite for a successful restructuring," said Chief Executive Wolfgang Schaefers in a statement.
Germany reformed its insolvency laws in March 2012 to make it easier and quicker for companies suffering from illiquidity to implement a U.S.-style reorganisation within a few months, adopting a debtor-in-possession approach that is the hallmark of Chapter 11.
Previously, an administrator would take over an insolvent German company with the aim of either selling it to a strategic investor or winding down the operations, with management removed from all decision-making functions.
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