Eyemaxx bondholders must continue to “tremble”. Since the “restructuring plan in Austria over the assets of Eyemaxx Real Estate AG (ISIN DE000A0V9L94) has failed” investors will probably have to be prepared for a long wait until it is clear in the context of the two insolvency proceedings in Germany and Austria which assets were actually “behind the bonds”. How much could a recovery bring? Many unanswered questions about a corporate network that is obviously difficult to understand. Where, even after the appointment of joint representatives for the respective outstanding bonds, creditor committee meetings, assemblies and the ongoing screening and security work by the insolvency administrator, no statements about a potential quota seem possible. ( Eyemaxx: SdK board of directors takes a stand “… one could try to deliberately take advantage of the bondholders.”and later “On the failed Austrian restructuring procedure as a glimmer of hope„).
So now it’s the insolvency administrator’s turn. At least that’s what it looks like. And it’s about EUR 200 million, so the fronts are dogged. The activities and transactions of the former sole director and main shareholder of Eyemaxx are probably now being forensically examined – excitement guaranteed. What “corpses” may lie in the “cellar” of Eyemaxx history? Since December 6, the district court of Aschaffenburg has granted the application of One Square and Heuking Kühn and opened secondary proceedings in Germany. How things will continue here is open. Patience is definitely required.
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Secured Eyemaxx bond receives new common representative. Voted out One Square with a resounding slap in the face. Conflicts of interest seem well established in the eyes of creditors.
In the last sensational “bankruptcies” there always seemed to be only one name when it came to representing the rights of potentially aggrieved bondholders. An obviously quite lucrative business “in the niche”. Now, however, it seems that “One Square Advisory Services S.á.rl” has gone a bit too far with its claim to almost sole representation in such cases.
So what recently made the name One Square known as a “spokesman” at Senevita, Deutsche Lichtmiete, Windreich or Alno, for example, now seems to have a taste – if you follow the allegations of the Düsseldorf law firm mzs Rechtsanwälte in the Eyemaxx bonds. In other words, the lawyers identified – understandably – a conflict of interest among the holders of the various outstanding bonds. Because one of them was/is (bond 2020/25) secured, in contrast to the other bonds, with real estate of the company or of subsidiaries. In contrast, the other bonds, in which One Square already acts as joint agent, are unsecured.
Conflict for One Square, which actually appears unsolvable – except for various “common representatives” – already identified as a problem by the SdK
As a result, they tried to knock out “One Square”. The law firm mzs Rechtsanwälte has obviously achieved something almost unbelievable: Despite the general lack of motivation to participate in such meetings of creditors after an insolvency application, the Düsseldorf lawyer G. Meyer zu Schwabedissen is entitled to the required participation of at least 50% of the outstanding bonds in this case reach. In the past, such creditors’ meetings had to go to the second round because the 50% “participation” was not reached, where the absolute majority of the votes given was enough.
Vote 21.03. to 03/25/2022 with a clear result: One Square was clearly deselected, Meyer zu Schwabedissen was elected with more than 99%
Officially it reads like this: “Regarding the vote without a meeting scheduled by EYEMAXX Real Estate AG, the insolvency administrator in the secondary insolvency proceedings and the liquidator in the main insolvency proceedings for the “Anleihe 2020/2025” (ISIN DE000A289PZ4, WKN A289PZ) in the period from March 21, 2022 to March 25, 2022 the head of voting notary Dr. Schlotter informed of the voting result (cf. the notarial record). Accordingly, the vote was quorate and lawyer Gustav Meyer zu Schwabedissen from Düsseldorf was elected the new joint representative with 99.9% of the votes cast. The previous joint representative, One Square Advisory Services S.à.rl from Switzerland (“One Square”), was also voted out with 99.9% of the votes cast.
All other proposed resolutions, in particular those relating to the authorization of the new joint representative, his remuneration and the advance payment of creditors who had pre-financed the costs of the voting, were also adopted with more than 99% of the votes cast.
Collision of interests of the previous joint representative eliminated
The now insolvent Eyemaxx Real Estate AG had placed several bonds. Only the “2020/2025” bond is secured by real estate. The previous joint representative, One Square, had been elected joint representative for both secured and unsecured bonds. This double function necessarily led to conflicts of interest, cf. our press release from March 14, 2022.
Understandably, a large number of bondholders did not want to accept such a conflict of interests. A group of creditors had therefore applied to have One Square voted out. One Square Advisors had tried to prevent the vote from being voted out by urging people not to vote. Nevertheless, the required voting quorum was reached and the deselection was carried out with an approval rate of 99.9% of the votes cast.
Proceed further
The new joint representative, lawyer Meyer zu Schwabedissen, will now form a creditors’ advisory board composed of representatives of institutional creditors as well as technically competent private investors. After taking over the office, his first task is to reach agreement with the insolvency administration on the realization of the real estate securities. The new joint representative will be working hard on this. “
Hope for some reduces the chances of other bondholders – the question is how One Square is now positioning itself
How will One Square react to this clear no-confidence vote. Exciting question, whether a frontal attack on the “security clauses” of the 2025 bond is now being launched in the interest of the “remaining bondholders represented” by One Square, thereby subsequently confirming the justification of the new common representative of the 2025 bond?
Difficult situation. The 2025 bondholders have at least now protected themselves from potential conflicts of interest of “their” common representative with an unusual “rebellion”. It remains to be seen whether the collateral will also prove valuable. In any case, the chances of “getting back” at least a larger part of the bond have increased.
Questions remain: Shouldn’t anyone have checked the conflicts of interest of a common representative of all outstanding bonds in advance? If One Square “changes its mind” on collateralizing the 2025 bond after being voted out, would the previously suspected conflicts of interest then be confirmed? At least then the “other bondholders” after the elimination of the conflicts of interest, which was involuntary for One Square…
There could be a lot of need for discussion about the future selection of “joint representatives” and their interests. Perhaps a good start to generally shed light on conflicts of interest in the context of insolvencies…
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