Restructuring of Financings Secured by Properties Leased to KarstadtQuelle

February 25, 2010

Cleary Gottlieb represented Goldman Sachs in restructuring the €3.6 billion financings secured by properties leased to department store chain KarstadtQuelle (later renamed Arcandor). The restructuring became necessary due to the insolvency of the Arcandor Group, including its subsidiaries Karstadt and Quelle. The restructuring closed on February 25. Cleary Gottlieb also represented Goldman Sachs in originating the initial senior and mezzanine financings of these properties in July 2006, comprising a sale-and-lease-back of more than 170 properties.

Cleary Gottlieb’s role in the restructuring extended to various aspects of the transaction, including amendments to finance documents and security, changes to intercreditor and syndication arrangements, and lease modifications.

It is expected that Karstadt’s insolvency receiver, Hubert Görg, will soon present to Karstadt’s creditors an insolvency plan with the aim of rehabilitating the company. The recent restructuring of finance and lease arrangements was critical to the willingness of the insolvency receiver to proceed with rehabilitation planning.