Investors’ Claims for Damages
Approximately 278 million euros were invested by investors into the ProReal Europa 9 and ProReal Europa 10 capital investments – now they risk losing the majority of their money. According to a mandatory announcement by the two ProReal companies, published by BaFin on May 5, 2025, investors are expected to lose 95 percent of their capital. No further interest payments are expected.
It had been clear for some time that investors in the subordinated bonds of ProReal Europa 9 GmbH and ProReal Europa 10 GmbH faced significant financial losses. However, the near-total loss of their investment capital is likely a severe blow to investors. The money, however, is not necessarily lost for good. Investors still have the possibility to assert claims for damages, according to the business law firm MTR Legal, which has extensive experience in capital market law and consistently represents the interests of investors.
Investors invested approximately 278 million euros
ProReal Europa 9 and 10 GmbH are part of the One Group and have raised around 278 million euros through subordinated bonds from investors. With their money, investors could indirectly participate in real estate projects, as the issuers passed on much of the investors’ funds in the form of interest-bearing subordinated loans to the pool company SC Finance Four, which in turn forwarded the funds to individual project companies.
However, this financing cycle faltered when SC Finance Four had to file for bankruptcy in spring 2024. The reason was the real estate crisis, which also affected various real estate projects. Since SC Finance Four had also given the investors’ money as subordinated loans to the project companies, it could not assert claims against the project companies and fell into insolvency itself.
As a result, the investors’ funds, which had granted subordinated loans to the ProReal companies, were also at risk. Due to the agreed subordination, they cannot assert claims against the companies if this could result in or even just threaten insolvency.
Investors receive less than 5 percent back
SC Finance Four attempted to recover through a self-managed insolvency. However, discussions with a potential investor did not succeed. ProReal Europa 9 GmbH and ProReal Europa 10 GmbH subsequently withdrew their claims against SC Finance Four in the insolvency proceedings and sold the claims directly to the investor. ProReal Europa 9 GmbH was able to generate approximately 6.2 million euros from the sale, with about 10.8 million euros going into the coffers of ProReal Europa 10 GmbH. This is far from enough to even remotely satisfy the investors’ claims. As the companies stated, they receive, based on the nominal amount of their capital investment, less than 5 percent back. There are no payments on existing or future interest claims.
For investors, their involvement with ProReal Europa 9 GmbH and ProReal Europa 10 GmbH has developed into a financial disaster, nearing a total loss. This raises the question of claims for damages even more.
Disclosure of Risks in Asset Investment
Capital investments with an agreed subordination are extremely risky for investors, as due to the subordination, they can hardly assert claims against the issuers. In the event of insolvency, they must give priority to all other creditors, which means they might end up empty-handed.
The investors of ProReal Europa 9 and 10 have now painfully experienced how risky their investment is. However, they should have been informed about the existing risks, and in particular about the risk of total loss, by the investment advisors or brokers. If these risks were downplayed or completely concealed, they may have made themselves liable for damages.
Furthermore, the prospectuses must inform about all aspects that can be important for the investment decision, including risks. Missing, incomplete, or incorrect information can lead to claims for damages due to prospectus liability.
MTR Legal advises within the capital markets law and supports affected investors of the ProReal series.
Feel free to contact us!
