Vol 21 (2024) - Issue 5

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Real Estate Companies in Insolvency: The Perspective of a Financing Bank

Synopsis
Due to the long-standing real estate boom in Germany, the current downturn in the real estate and construction industry is enormous. Construction projects remain unfinished and insolvency applications are piling up. It is therefore worth to have a closer look at the legal and economic impact of this development.
The real estate industry in Germany does not have an easy time at the moment. High interest rates, increased energy and material costs, overregulation and a shortage of skilled labour – to name just the most
important factors – have a major impact. Numerous real estate companies have filed for insolvency in recent months. Prominent examples are the insolvency applications filed by Development Partner, Centrum, Euroboden, Gerchgroup, Omega, Signa, Schoofs Immobilien and One Group. It can be assumed that this trend will continue.
This development poses considerable challenges for all parties involved – but especially for financing banks.
In the last 15 years of upswing in the sector, a great deal of expertise has been lost at both business and legal level. This article intends to provide a summarised overview of the main (legal) pitfalls in connection with
the insolvency of a real estate company from the perspective of a financing bank (including a focus on the
currently frequently encountered situation of an unfinished and unleased property).