Estonia, Legislation, Real Estate

Lintgen said in its appeal that the reorganization plan was voted out by a large majority of creditors and a number of preconditions arising from the law on the conduct of reorganization proceedings have not been fulfilled in the case of AS Tallinna Moekombinaat, which precludes the conduct of expert proceedings.

The creditor also said that Tallinna Moekombinaat's insolvency began long before both the start of reorganization proceedings as well as the wave of COVID-19. 

"The company's creditors were grouped incorrectly, which distorted the result of the vote. Based on the above, the reorganization proceedings must be terminated," Lintgen said.

Tallinna Moekombinaat has been unable to make key payments to its creditors since September 2019 and the company's assets do not cover its obligations in the amount of tens of millions of euros, the company's legal representative Toomas Vaher said in a press release.

"Tallinna Moekombinaat with its six to seven employees is not an important company or one that should be saved at the creditors' expense. The mall will also remain open in the event of bankruptcy," he said.

The creditor said that the reorganization plan would enable Tallinna Moekombinaat to retain 100 percent ownership of the T1 mall without providing a clear plan on how the mall should be reorganized. The sole purpose of the plan at hand is to delay bankruptcy, according to Lintgen.

Lintgen is currently in the process of developing a reorganization plan for the mall.

"Takeover of T1 by a new owner with the skills and resources required for investment and development of the mall will benefit tenants, visitors and the local community alike," the creditor said.

Lintgen Adjacent Investments S.a r.l. is a company related to Sixth Street Partners, which financed the construction of T1 in 2016 and is the mall's main creditor.

The mall requires over 10 mln euros in investments, according to Sixth Street Partners. 

"We are willing to make new investments in T1 and we will do everything in our power to protect our investment and rights, and turn T1 into a success story," the lender said.

On April 3, AS Pro Kapital Grupp notified about the initiation of reorganization proceedings of its subsidiary, AS Tallinna Moekombinaat. On May 7, Pro Kapital announced that AS Tallinna Moekombinaat had submitted a reorganization plan for the acceptance of its creditors, outlining a brief summary of the measures to be applied in the plan.

A substantial majority of the creditors voted for the acceptance of the plan. However, the claims of the creditors who voted for the plan, were not sufficient to get the plan approved. On June 2, AS Tallinna Moekombinaat submitted an application to the court to approve the reorganization plan without the prior acceptance of the plan by the creditors.

In mid-June, the Harju County Court decided to go on with the reorganization proceedings by appointing two experts to evaluate the plan, the approval of which will be decided by the court by Aug. 10. Lintgen said that it does not see any legal basis for starting expert proceedings.