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  Recovery & Insolvency, Restructuring & Insolvency

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  Property

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  Berlin 2020

German Property Group: Justus von Buchwaldt is insolvency administrator for assets of German Property Group

In October 2020, the District Court of Bremen initiated insolvency proceedings against the German Property Group and appointed Justus von Buchwaldt as insolvency administrator. The District Court in Hannover, which is dealing with the proceedings of the GPG subsidiary, Dolphin Capital 80, had previously appointed Justus von Buchwaldt as a professional expert for the same company. Bearing in mind this close association, von Buchwaldt had been able to build a strong picture of the company since his initial introduction in September 2020. Since that time, numerous other proceedings had been opened via subsidiaries for which he also acted as insolvency administrator.

Since the time they actually started work in October 2020, von Buchwaldt and his team have been investigating DC 80s international connections and payment flows – with the help of a law firm in Great Britain that specializes in financial fraud – in order to also uncover, secure and consolidate all relevant assets abroad. This also involves the identification of possible claims and opponents of claims that go beyond GPG’s immediate sphere of activity. The aim is to identify and recover illegal or contestable payments and dispositions made by DC 80 that are detrimental to the insolvency estate.

In November 2020, at the suggestion of the insolvency administrator, the District Court of Bremen set up a provisional creditors committee for the insolvent German Property Group. The committee consisted of five representatives of those with significant claims (in the high hundreds of millions) against the GPG. Among them were legal representatives of small and large international creditors, as well as a representative of the Federal Employment Agency. The creditors committee was confirmed in August 2021.

To date, the BBL team has registered around 6,700 claims against DC 80, which total around EUR 794 million. In addition, there are numerous claims registered in the proceedings of the GPG parent company and various individual companies.

Around 15 to 20,000 investors are registered worldwide and their total investment in the GPG group is estimated at EUR 1 to 1.5 billion. The investors – most of whom come from England, Ireland, France, Singapore, Japan and South Korea – are mainly small investors (investment from 10,000 euros) but there are also institutional investors. The receivables are offset by around 50 properties of varying value in Germany.

Last but not least, insolvency administration’s tasks include the Germany-wide recording, insurance and, if necessary, securing of GPG’s real estate; in individual cases, sales transactions that are being processed must be checked, overseen or even prevented. Any land charges should be audited in detail and, if necessary, negotiations are held with creditors who are actually entitled to separate relief. The real estate must also be appraised and prepared for orderly sale; 20 properties have already been marketed since July 2021 with the help of an external real estate specialist.

In addition to working with investors and their representatives, the intention is for the BBL team to work closely with the UK Financial Markets Authority (FCA) and the Serious Fraud Office (FSO). Cooperation with the Financial Services Compensation Scheme (FSCS) – which in many cases has regulated the claims of British investors against DC 80 – has already been taken up a notch following the opening of proceedings.