Reuters: Bankruptcy News: Treveria and Hatfield clash over defaulted German loan

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Treveria and Hatfield clash over defaulted German loan May 17th 2013, 13:04 By Owen Sanderson Fri May 17, 2013 9:04am EDT LONDON, May 17 (IFR) - Special servicer Hatfield Philips has sought to reassure investors in the Talisman-6 CMBS worried about the future of the EUR360.4m Orange Loan, which has been in default since July 2012. The defaulted borrower, UK-listed property investor Treveria, published a notice on Tuesday stating that the Orange Loan claims could rank behind other insolvency creditors' claims. It based this statement on a recent decision by a German insolvency court which accepted a principle called "equitable subordination" in relation to the claims. However, Hatfield gives a very different account. Since initial enforcement, Hatfield Philips has been trying to remove the manager of the 150 properties backing the loan, as it was affiliated with the borrower. It lined up third party manager Corpus Sireo to take over, and was conducting creditor meetings covering the 36 legal shell entities making up the borrower group. Balkene Ltd, an Isle of Man entity registered by IOMA Fund and Investment Management (also the backer of Treveria), as well as Treveria Asset Management itself, have been challenging the balance of voting rights in these creditor meetings. According to Hatfield, only one of these challenges gained any traction. At the meeting, there was a proposal to reduce the voting rights of the CMBS issuer and the B-lender by 50% as a compromise - according to Hatfield, a common compromise. However, this would likely have still left the CMBS and B-lender very much in charge. "Assuming that the borrowing entities under the Orange loans are special purpose vehicles with no substantial debt in addition to the securitised loan, the reduction of the voting rights should not be overly negative," said Christian Aufsatz of Barclays CMBS research in a note. Treveria and Balkene went to court to remedy this proposal, but the insolvency court confirmed the reduction, according to Hatfield, dismissing the application for remedy. Hatfield also explained that the court had stated that it was questionable that the principles of subordination apply in this instance. Hatfield described the court's decision as having "mere procedural character" and "not in any respect prejudicial to the still outstanding determination of the merit and the rank of the filed claims". Link this Share this Digg this Email Reprints

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