Adler - comment

ARE’s shareholders have started litigation in Berlin to stop Adler from selling up to 95% of its assets in ARE to a third party. Although we do not believe this to be the strategy, we agree that ARE bondholders are at risk of ultimately holding only a shareholding in Brack and a receivable from a third entity that removes them from the hard assets. If that receivable is intercompany in Germany and triggers can be avoided for long enough, ARE bondholders may even find themselves subordinated. However, we are not sure what tangible legal angle the shareholders are pursuing to stop this, other than highlighting the situation for posterity.