Accounting firm KPMG declines to audit Adler subsidiary Adler Real Estate's 2022 balance sheet.
The parent company Adler Group provided information on this in a mandatory announcement for the stock exchange on Wednesday evening.
At the beginning of January, the troubled real estate company tried to force the appointment of KPMG as auditor by court order.
But the mandate cannot be claimed in this legal way.
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A spokesman for the auditing company said on Thursday: "After a detailed assessment of the decision by the district court of Charlottenburg on January 5, 2023 to appoint KPMG as the auditor of the individual and consolidated financial statements for the financial year 2022 of Adler Real Estate AG and taking into account the all the circumstances, came to the conclusion not to accept this test.” So KPMG is not playing along.
Adler's unsuccessful search for an auditor is unprecedented.
The audit assignment is particularly sensitive because the company has not been able to completely dispel doubts about its balance sheets for a long time.
In addition, the Wirecard scandal from 2020 showed how high reputational damage and liability risks can be for auditors when they audit companies with opaque balance sheets.
Adler and KPMG have an explosive history in common.
In the past, the Luxembourg member company of the international KPMG network was responsible for the annual audit of the balance sheets of the Adler parent company Adler Group based in Luxembourg.
The German member company of KPMG, in turn, was commissioned by Adler to carry out a special forensic audit in order to clear up doubts about the balance sheet figures and serious allegations by a short seller.
However, this did not succeed to the desired extent.
Instead, at the end of April 2022, KPMG failed to audit the Adler Group's financial statements for the 2021 financial year and declined to further audit the real estate company.
Since then, Adler has been desperately looking for a new auditor and finally went to court to have an auditor appointed.
But even that didn't work now.
For Adler, this raises the anxious question of how, under these circumstances, investors and creditors can be persuaded in the future to provide the company with urgently needed money.
Despite everything, Adler is optimistic and wants to continue working on a solution, as can be heard.
In a spontaneous assessment on the social network Twitter, the lawyer Marc Liebscher from the investor protection association SdK expects serious consequences.
He assumes that Adler is now finally without an auditor, so that banks would have to call in their loans in accordance with legal regulations.
Corporate bonds worth billions, on which Adler bases a large part of its financing, also require an audited balance sheet.
Last year, however, Adler was able to negotiate a grace period until the end of December 2023 with some important bondholders.
On Thursday morning, the Adler Group also announced that it had reached an agreement with a “sufficient majority of bondholders” on how to implement the changes to the terms of a bond.
Adler had initially attempted this by way of a creditors' vote, but had not reached the required threshold.
A restructuring plan based on English law has now been agreed.