German real estate adviser Engel & Völkers is mulling legal action against the pension fund for dentists, Versorgungswerk der Zahnärztekammer Berlin (VZB), for causing the insolvency of a company linked to the Hamburg-based residential property broker.
Engel & Völkers, holds a minority stake in EV Work Edition, a joint equity investment with VZB.
A spokesperson for E&V told IPE Real Assets that VZB has been reluctant to agree to measures including loan extensions or subordinate financing, or to constructive proposals to transfer the investment and associated financing obligations linked to EV Work Edition, that provides co-working spaces.
“We regret to note that VZB is accepting the insolvency of investments, as well as damage to its reputation and image, and other economic losses, or is sometimes deliberately causing them. Engel & Völkers is considering legal action due to this behaviour,” the spokesperson said.
EV Work Edition went bankrupt alongside EV Venture Management, a service provider for real estate start-ups in growth phases, and EV Digital Invest, a crowdfunding and mezzanine finance platform, using the E&V brand but not invested in by the real estate adviser.
EV Venture Management and EV Work Edition have no connection to Engel & Völkers’ core business, the spokesperson said.
The insolvency of EV Digital Invest and EV Venture Management would result in losses in terms of fees, but legal action is not planned in these cases, he added.
The pension fund for dentists has refused to disburse loans to all three offshoots of E&V as a result of internal disputes and management changes, and misjudgements by the former VZB management, with internal investigations currently underway, E&V’s spokesperson said.
VZB, which is in a state of financial distress, has so far rejected allegations, saying in a statement that decisions to block loans to portfolio companies were of “legal and economic nature”, made with the support of internal and external experts.
This latest situation comes in the wake of criticism directed at VZB for past investment choices that resulted in significant losses. The fund was one of the principal backers of Element Insurance, a Berlin-based insurtech start-up that filed for insolvency earlier this year.
Although VZB initially defended its decisions, it has since acknowledged that its financial situation has been strained by a strategy initiated in 2013 involving real estate and direct company investments, which has led to substantial write-downs.
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