IVG Immobilien has submitted an insolvency plan plan to a Bonn court where it proposes swapping equity for debt. If the plan is accepted, creditors would be placed in control of the troubled German real estate giant.
“Management is convinced that it has worked out a concept that enables a complete reorganization of IVG and creates a sustainable structure,” IVG Chief Executive Wolfgang Schaefers said in a statement. Under the proposal, IVG will agree to reduce its capital and issue new shares to creditors in exchange for outstanding debt. Creditors would recoup a reported 60 percent of their investment. IVG will then be split into three separate businesses focused on real estate activity, institutional funds and gas storage.
IVG, which co-owns London’s Gherkin tower, failed to reach an agreement over debt restructuring with creditors last August. The company racked up a debt of more than €4bn during a rapid expansion that included financing The Squaire, a business and hotel complex at Frankfurt airport that suffered from cost overruns, according to Reuters.
