Default on repayment and interest payment
Investors in the ProReal Deutschland 7 bond must once again brace themselves for bad news, as the repayment of their invested capital is highly uncertain. According to ProReal Deutschland 7 GmbH, the company is currently unable to repay the capital or pay out interest. It is impossible to predict when and to what extent payments will be made. The issuer’s mandatory announcement was published by the financial supervisory authority BaFin on May 15, 2025.
ProReal Deutschland 7 GmbH had already extended the term for the subordinated bond. The fact that the company has nevertheless been in default since January 1, 2025 and cannot predict when and to what extent investors will receive their repayments or outstanding interest is an alarm signal for investors, who now have to fear for their money. To prevent financial losses, investors should therefore make use of their legal options, advises the commercial law firm MTR Legal Rechtsanwalt, which has extensive experience in capital markets law.
Timing and amount of repayment uncertain
Through subordinated bonds, investors could indirectly participate in real estate projects in which ProReal Deutschland 7 GmbH invested and to which the project company granted subordinated loans. Due to the tense situation in the real estate market, the project company has run into financial difficulties and cannot repay the loan. Even a sale of the real estate would not change this or provide sufficient liquidity, according to ProReal Deutschland 7 GmbH’s mandatory announcement. Therefore, they are unable to make the repayments and interest payments to the investors.
For investors, it remains completely unclear when and how much of their invested money they will get back. This depends on the further development of the real estate projects and the repayment of the subordinated loans by the company. ProReal Deutschland 7 GmbH further stated that this development cannot currently be predicted.
Significant losses at ProReal Europa 9 and Europa 10
These are very unsettling news for investors. More than ever, they must fear considerable financial losses. Especially as investors in similarly structured bonds, ProReal Europa 9 and Europa 10, were only recently informed that they are likely to lose 95 percent of their invested capital. These investments are also subordinated registered bonds.
For investors in ProReal Deutschland 7, things may not turn out as badly, but they should not ignore the warning signals and should consistently make use of their legal options. At present, they are experiencing firsthand how subordinated bonds can be extremely risky investments. Because of the contractually agreed subordination, they cannot assert claims against the issuer if doing so would require the issuer to file for insolvency or if insolvency could even merely occur as a result. If insolvency does nevertheless occur, investors are again at a disadvantage as, due to the subordination of their claims, they rank last among creditors and may walk away empty-handed from the insolvency proceedings.
Possible compensation claims for investors
To potentially improve their situation, investors can have the validity of the subordination arrangement reviewed. This is not the case, for example, if the corresponding subordination clause is not transparent or is insufficiently understandable for the investor.
Furthermore, the assertion of compensation claims can be examined. Investors should have been informed about the existing risks and, in particular, about their risk of total loss when participating in the ProReal Deutschland 7 bond. If this information was not provided properly, and if investment advisors concealed or downplayed existing risks, they may be liable for damages to the investors.
In addition, investors must also be informed about the risks of the investment in the securities prospectus. If the information provided is incorrect, misleading, or incomplete, claims for damages may exist against those responsible for the prospectus.
MTR Legal Rechtsanwalt advises on capital markets law and supports affected investors of the ProReal series.
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