€1.2 bn
Restructuring of debt secured by 109 Karstadt stores
Creditor Restructuring

Brookland Role

Sole financial advisor to the Servicer (representing senior creditors) on the restructuring of a senior loan which had been securitised.

Transaction Background

The CMBS transaction was secured against circa 110 department stores let to Karstadt, the large German department store operator, as part of a sale and leaseback transaction in 2006. The parent of the tenant (KarstadtQuelle) filed for insolvency in 2009 and the loan was approaching its maturity. The equity sponsors primarily comprised real estate funds managed by global investment banks. Both the underlying loan and the CMBS transaction needed to be restructured and a potential sale of the tenant by the insolvency administrator was also being proposed.

Result Achieved

  • After some initial tactical moves by the equity sponsors to keep the servicer out of the process and attempt to influence the appointment of financial advisers for the noteholders, Brookland, together with the Servicer, wrestled back control and thereafter managed and co-ordinated all stakeholders including the sponsors, the noteholders, the insolvency administrator, the rating agencies, and other relevant transaction parties.
  • We drove the restructuring through a Servicer-led process on behalf of noteholders and its ad hoc steering committee of noteholders. We gained support from 95% of noteholders and successfully navigated the noteholders through one of the most high profile and complex European CMBS restructurings in recent history. We also worked to influence the sale of the tenant company to ensure that noteholders interests were protected.
  • The transaction was the first European CMBS to achieve both a loan and CMBS note extension, made particularly challenging by the complex structure involving 4 classes of CMBS notes, 3 tranches of mezzanine debt and a separate senior facility.
  • The senior creditors that we represented ultimately made a 100% recovery through sales of the department stores over the extended life of the loan.