Reconstruction is looking likely to be the only option for Dolphin Trust/German Property Group and the newly formed investors committee.
Troubled German property scheme, The Dolphin Trust (now known as German Property Group), has this month been updating investors in relation to their next steps regarding the ongoing property investment dispute.
German Property Group has borrowed an estimated £600m from UK investors. Many investors have not received any of the returns on investment they had been promised. Now, it is looking likely many investors will lose at least half of their investment, as the investment company decides between insolvency or restructuring their debt.
May 4th – German Property Group send investors an update
Earlier this month, German Property Group sent an update to investors by way of an online letter. In it, they said that:
Negotiations with interested parties wishing to buy the whole portfolio has now come to a conclusion
The only way forward for GPG, as they see it, is a choice between full restructuring of GPG debt or insolvency
GPG would see a reduced amount that they would be able to return to their investors.
- GPG have been approached by a group of GPG investors who have gathered together to discuss how they could assist
In the letter, they expressed their concern with the insolvency route, stating that his would result in “a near total loss for investors”.
GPG also said that they initially had various interested parties willing to buy their whole property portfolio, however, due to the “current climate of uncertainty”, no investor decided to go ahead.
May 13th – Global Investors Committee send investors an update
In the May 4th update, GPG stated that they were approached by a group of GPG investors who they are looking to work with to come to best solution possible. This group is known as the Global Investors Committee, which has been set up by representatives from the major jurisdictions where investors are based.
On May 13th, the Committee sent GPG investors an update, also online. In this, they too state that insolvency would be the worst case scenario for investors, and are instead hoping to reconstruct the properties. This would mean the Committee taking control of whatever assets exist, and taking on the development of the assets themselves.
In their letter, they stated:
Until the economic effects of Covid-19 are known, no one can possibly value any assets. However, there is a portfolio of projects that cost several hundred million euros to buy so the minimum return should be in excess of that from insolvency, even if the assets are simply enhanced and sold rather than developed.
It is hoped that a return after developing all or most of the assets could be as much as 50% of the capital invested.
Reconstruction, the Committee have said, would involve transferring all SPVs with assets to a new company. This would be:
Wholly owned and controlled solely by the investors, completely separate from GPG, which would then take over dealing with the assets.
What is clear is that reconstruction remains the best case scenario for investors. Unfortunately, the Committee are saying the return on investment could just be potentially as much as 50% of the original investment. They also advised that failure in that route could result in a near total loss for investments.
Investors have been asked to send their responses to the proposed plans by Friday 22nd May.
How can Smooth Commercial Law help?
Are you a Dolphin Trust/German Property Group investor? We may be able to help.
If you think you are the victim of a mis-sold SIPP from The Dolphin Trust, or if your SIPP is not performing as you were told it should be, then please get in touch with our specialist mis-sold SIPP solicitors to see if we can claim compensation for you.
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent, fraudulent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.