Dhe crisis-ridden real estate company Adler Group has still not found an auditor who would be willing to audit the financial statements for the 2022 fiscal year. Although the balance sheet can only be checked after the company has prepared it after the end of the financial year, things get tight until then. Because the previously responsible auditor KPMG has withdrawn from the mandate, a new auditor would first have to familiarize himself with the complex group structure.
It is particularly explosive that the creditors of some Adler bonds could reclaim their invested money if the company does not submit audited annual financial statements by April 30, 2023. As of June 30, the Adler Group had outstanding bonds totaling EUR 4.4 billion – a large part of which has a clawback clause.
The worst was prevented at the last moment
At the end of April, Adler was only able to prevent a violation of bond conditions at the very last moment. The auditor KPMG had refused to certify the balance sheet for 2021, but it was checked. Given this formality, bondholders had no valid reason to demand their money back, although some of them might have liked to do so because of doubts about the company.
According to a report by the Bloomberg news agency on Wednesday, confidential talks are now taking place between Adler and major creditors. The aim is for the company to free itself from the obligation to present audited financial statements. In addition, Adler is trying to find new financing of several hundred million euros. A spokesman for the company did not comment. According to the report, Adler is also working on a restructuring report to get new money. In its standard IDW S 6, the auditing institute IDW has specified requirements for such restructuring.
KPMG justified the refusal to certify Adler’s balance sheet by not being able to assess with sufficient certainty whether transactions with related parties had taken place and whether these transactions had been fully and correctly recorded. This question was also investigated by a special forensic audit commissioned by Adler, which was also carried out by a company that is a member of the international network of auditors KPMG.
This special audit could not completely eliminate the doubts of shareholders and creditors about Adler’s balance sheet, which were aroused by an attack by short sellers. That’s why auditors don’t want to shoulder the difficult mandate. However, if no auditor is willing to voluntarily audit a company, a court can still appoint an auditor.