GERMANY – The German real estate company IVG Immobilien AG has entered insolvency, but will be allowed to draw up its own refinancing plan in accordance with German law.
In a surprise statement issued to investors and the public on Wednesday, IVG had announced its creditors had not agreed to a refinancing plan after all – contrary to statements from earlier in the month.
The parent company of the IVG group, IVG Immobilien AG, has filed for a so-called Schutzschirmverfahren - or protective shield proceedings – introduced by Germany's Bundestag last year.
The approach allows insolvent companies to draw up their own restructuring and refinancing plan under self-administration.
A local court in Bonn has approved IVG's request and has appointed Horst Piepenburg, attorney at law and Dusseldorf-based restructuring expert, as preliminary trustee.
In a statement, IVG noted the proceedings had become "unavoidable" as the various creditors "failed to agree on a joint comprehensive restructuring plan even after several intensive rounds of negotiations".
Wolfgang Schäfers, chief executive of IVG, said the insolvency was "all the more regrettable" because "essential key shareholders of the company had signalled to support the restructuring plan" presented earlier this month by IVG and the two major creditors. The restructuring plan would have led to the creditors taking control of the parent company.
IVG said it would continue to seek a consensus on a restructuring plan among its creditors but would for now continue with the plan presented.
It emphasised that the operative subsidiaries of IVG remained unaffected by the insolvency proceedings which only apply to the parent company.
"The basis for future success will be a much more conservative and considerably less volatile business model compared with the years before the financial crisis," IVG added.
Following the announcement, shares in IVG fell to €0.07. Shares have since risen to €0.08 by noon local time on Thursday.