The mid-market bonds of the early 2010s did not necessarily have a good reputation. Quite a number of them were canceled, and investors were often left with more or less nothing, often enough under dubious circumstances. Also with the real estate project developer Eyemaxx, which has now slipped into insolvency (FAZ of November 5), fears are being voiced that investors might receive less on their claims than they should actually be entitled to. The reason is that Eyemaxx has filed an application for restructuring proceedings without self-administration at the regional court in Korneuburg in Austria, although the seat of Eyemaxx Real Estate AG is in Aschaffenburg, Germany. "The bond creditors are to be left behind in the insolvency proceedings," suspects Frank Günther of the consulting company One Square Advisors.

There are several points in the Austrian restructuring process that appear critical for the bondholders.

First, there is a statutory minimum severance payment of only 20 percent on the claims.

This is exactly what Eyemaxx offers.

Second, there is no grouping of interests in the neighboring country through a common representative.

As a result, every creditor has to register his claim in Korneuburg himself.

Thirdly, the registration period for this expires on December 1st.

The tight schedule indicates, says Günther, that the process has been prepared by the company for a long time.

A vote on the restructuring plan presented by the company is due to take place on January 26th.

"Unacceptable"

It should also be noted that in these votes in the Austrian procedure it is not only the volume of the bonds held that matters, but also the number of people who voted for or against a motion, says Marc Tüngler, General Manager of the German Association for Protection of Securities (DSW). It is particularly noticeable that the flight into Austrian insolvency law should not result in any cuts on the part of the owners of Eyemaxx Real Estate AG. It is not acceptable that bondholders should bear the risk and disadvantages alone, says Tüngler. So the continuation of the company in the Austrian restructuring process is carried out by the owners.

A settlement that is not based on the minimum quota, but based on the actual assets available, could possibly be advantageous for the bondholders.

After all, the so far most recently audited individual annual financial statements of Eyemaxx show assets of just under 196 million euros, with hardly any other liabilities worth mentioning besides bond debts of 150 million euros.

As of April 30 of this year, Eyemaxx had even stated assets of 246 million euros in the unaudited semi-annual report.

The restructuring application should now only contain 100 million euros - and a break-up value of zero.

"Are extremely irritated"

“With regard to the submission of an application for a restructuring procedure in Austria, we are extremely irritated after the company is based in Germany and the bonds concerned here were also issued under German law,” says Tüngler and warns: “Other companies could follow this example. “It is therefore important that the bondholders resisted and opened parallel proceedings in Germany. According to its own information, One Square Advisors submitted an application for third-party bankruptcy to the district court in Aschaffenburg on November 2nd, alternatively an application for the opening of secondary insolvency proceedings against Eyemaxx Real Estate AG. A request for a meeting of creditors to elect a joint representative for the respective bonds was made to the company,to ensure the best possible representation of the bondholders' interests. Eyemaxx have not yet responded to this.

Even if the function of the joint representative does not exist in the Austrian proceedings, Günther sees a high chance that his legitimacy will be recognized there if he is granted corresponding rights at a creditors' meeting.

A large number of creditors have already been won over to register for representation by One Square and the law firm Heuking Kühn.

A possible remuneration will come from the insolvency proceedings, the creditors would not incur any additional costs.

The DSW also offers investors a pooling of interests in order to be able to take joint action against the Eyemaxx project.

No comment has yet been received from Eyemaxx.