German court refuses to honour UK restructuring plan

The Frankfurt Regional Court has ordered the developers of Berlin’s flagship Project Fürst to repay €5m to Kassenärztliche Vereinigung Hessen, ruling that a UK restructuring plan used to extend loan maturities cannot be recognised in Germany. The decision, handed down on 22 August under case no. 2-12 O 239/24, marks the first time a German court has explicitly refused recognition of an English Part 26A plan since Brexit.

At issue was a senior loan originally due on 28 November 2023. KV Hessen had acquired €5m of the facility via assignment in 2022. Under the loan agreement, all material amendments — such as maturity extensions — required unanimous lender consent. When the English High Court sanctioned a Part 26A plan in March 2024 extending maturity to November 2025, KVH voted against. In July 2024 it terminated its syndicate commitment for “wichtiger Grund” (cause) and demanded repayment.

Frankfurt judges agreed. The court found that the unanimity requirement was precisely designed to protect lenders from being forced into fundamental contractual changes. The fact that maturity had been altered through the UK process without KVH’s consent was sufficient to justify termination and immediate repayment.

The court also ruled that the English sanction order was not effective in Germany. It held that the UK Part 26A plan could not be recognised under §343 of the Insolvency Code because it failed to include all creditors and thus lacked the “collective” nature required of an insolvency proceeding. Recognition under §328 of the Code of Civil Procedure was likewise rejected: the defendants had the burden of proving reciprocity — that an equivalent German ruling would be enforceable in England — but failed to do so in the limited documentary procedure. Recognition under the old Brussels Convention was ruled out altogether, with the court noting that post-Brexit no such regime applies.

The ruling came as a Vorbehaltsurteil (preliminary judgment) in an Urkundenprozess, meaning the developers retain the right to challenge it in follow-up proceedings. They may also appeal. But the order is provisionally enforceable, with security requirements set at 110 per cent of the claim.

The outcome directly challenges the strategy of forum shopping, where German borrowers shift restructuring to London courts in search of flexible tools unavailable at home. It was the same path taken by Adler Group, which controversially restructured billions of debt through English courts in 2023. Legal observers say Frankfurt’s stance could embolden creditors to resist London schemes more forcefully, undermining London’s attractiveness as a restructuring hub.

Fürst’s largest creditors — including Fidera and public-sector pension fund VBL — supported the UK plan, while subordinated creditors were effectively wiped out. Former owner Aggregate Holdings lost control of the project after struggling to refinance more than €1bn of debt. A spokesperson for the project company described the Frankfurt judgment as “merely an interim step” and pledged to contest it further. KV Hessen has not commented.

For investors, the lesson is clear: contractual protections in German loan agreements remain potent, even when foreign courts try to override them. Restructuring plans approved in London may not shield borrowers or lenders from enforcement in Frankfurt. As large development financings continue to test creditor coordination, the Fürst ruling shows just how abruptly legal certainty in cross-border deals can stop at the Channel.