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Challenging a Restructuring Plan to Safeguard Pari Passu Principle
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June 12, 2024
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FTI Consulting was engaged by an ad hoc group (“AHG”) of 2029 bondholders to advise and oppose the proposed UK Restructuring Plan (“UK RP”) for German residential real estate company Adler Group, because if approved it would detrimentally and unfairly affect the longer-dated maturities, including the €900 million 2029 Notes.
Our Impact
- FTI Consulting provided competing expert evidence to the High Court which set out analysis of estimated AHG recoveries under the proposed UK RP and in the Relevant Alternative which included the cross-examination of Senior Managing Director Lisa Rickelton. Justice Leech commended her expert report as being “very useful in understanding the consequences” of the proposed transaction.
- After the UK RP was initially sanctioned by the High Court in April 2023, FTI Consulting continued to support the AHG and its counsel during the appeal process, which was ultimately successful in overturning the original sanction order, following a hearing in the Court of Appeal in October 2023 and a final judgment by the Court of Appeal setting aside the order in January 2024.
- The analysis produced by our experts was pivotal in demonstrating that pari passu was breached, leading to the Restructuring Plan being overturned.
- To date, this represents the first and only time a UK RP has been challenged in the Court of Appeal, and the judgment has provided important guidance and precedents to the evolving UK regime for in-court (debtor-led) restructurings, with amendments witnessed for subsequent Restructuring Plans.
Our Role
- FTI Consulting advised the AHG on their discussions with the Adler Group and the SteerCo in respect to various restructuring proposals and related negotiations.
- The team provided robust, clear and detailed financial analysis of the UK RP under extreme time pressure, outlining returns to all series of Notes under both the Restructuring Plan and the Relevant Alternative scenarios, in conjunction with real estate valuation input from Knight Frank.
Published
June 12, 2024