SeniVita

To the creditors of the SeniVita Social Estate bond. ISIN: DE000A13SHL2

Statement on the reports of the joint representative RA Gustav Meyer zu Schwabedissen.

Request to convene a bondholders’ meeting for the purpose of the joint representative’s accountability report

Dear bondholders,

for given reasons, in particular against the background of the allegations made in the reports to the bondholders by the joint representative Mr. Gustav Meyer zu Schwabedissen, attorney-at-law, against the security trustee One Square Treuhand GmbH, we consider it appropriate to comment on these allegations and to inform the bondholders about the actual facts and the conduct in office of the joint representative.

Due to the demonstrable misconduct of the joint representative, Mr. Gustav Meyer zu Schwabedissen, attorney-at-law, the security trustee calls on the bondholders to participate in a call for a bondholders’ meeting at which Mr. Meyer zu Schwabedissen is to give account.

The background to this call for a meeting is described below.

Changed collateral concept and role of the steering committee.

In December 2019, the Chairman of the Management Board of SeniVita Social Estate AG, Dr. Wiesent had mandated One Square Advisors GmbH to support SeniVita Social Estate AG in the restructuring of its EUR 50 million convertible bond. Furthermore, Dr. Wiesent had commissioned KPMG, one of the major auditing firms, to prepare an Independent Business Review (IBR) or a restructuring report based on the IDW S6 standard.

This report was available for the creditors’ meeting in March 2020 and formed the basis of the Company’s restructuring proposal and certified a positive going concern forecast for the Company. Mr. Meyer zu Schwabedissen had already received the report prior to the creditors’ meeting and it formed the basis of a motion submitted by Mr. Meyer zu Schwabedissen at the bondholders’ meeting, which the Company supported and which was adopted by the bondholders’ meeting on April 7, 2020 with a majority of over 95% percent.

For this bondholders’ meeting, Mr. Meyer zu Schwabedissen had presented the new security trust agreement in his proposed resolution. As expected, he himself voted in favor of this proposed resolution and the new security trust agreement presented by him with the bonds represented by him with a nominal value of EUR 10.2 million bonds. This had been preceded by extensive information and coordination discussions between the Company and Mr. Meyer zu Schwabedissen.

Also, at this creditors’ meeting, One Square Treuhand GmbH was appointed as security trustee with the votes represented by Mr. Meyer zu Schwabedissen.

On the basis of the proposed resolution submitted by Mr. Meyer zu Schwabedissen, the Company’s collateral concept was changed. Whereas until the creditors’ meeting the proceeds from the sale of real estate went into an escrow account for the bondholders, in accordance with Mr. Meyer zu Schwabedissen’s proposal the proceeds from the sale of collateral were made freely available to the Company to finance further growth. This had previously been discussed in a meeting between the Company and its legal advisors, Mr. Meyer zu Schwabedissen and representatives of One Square Advisors GmbH, and was expressly welcomed by Mr. Meyer zu Schwabedissen.

The basis for this concept was the KPMG expert opinion mentioned above and the restructuring measures defined therein. A three-member Steering Committee, consisting of Dr. Wiesent, a representative of the security trustee and Mr. Meyer zu Schwabedissen as joint representative, was set up to monitor these measures.

The task of the Steering Committee was to monitor the implementation of the measures defined by KPMG in the report and the detailed design of the procedure for releasing the collateral. By unanimous resolution, i.e. also with the vote of Mr. Mayer zu Schwabedissen, minimum purchase prices for the properties granted as collateral were defined and adopted.

As soon as the defined minimum purchase price was exceeded, the collateral trustee was obliged to release the collateral.

Another requirement for release was proof of receipt of funds in accounts held by the Company. Once these criteria were met, there was no room for the collateral trustee to refuse to release.

Role of the joint representative Meyer zu Schwabedissen with regard to the bonds he represented.

In order to enable bondholders to form their own opinion of the conduct of Mr. Meyer zu Schwabedissen as joint representative, the role of Mr. Meyer zu Schwabedissen is set out below:

Candidacy for Joint Representative Mr. Meyer zu Schwabedissen based his candidacy for joint representative and the new trust concept and trust agreement he put to the vote on an expert opinion which – as is known today – he himself had already called into question at the time of the creditors’ meeting.

This became clear at the latest at the 4th creditors’ committee meeting of the insolvent SeniVita on May 26, 2021, at which Mr. Meyer zu Schwabedissen pointed out before witnesses that he had already considered the KPMG expert opinion to be incorrect in April 2020. In this creditors’ committee meeting, as well as on several occasions in bilateral discussions, he made the following statement:

“I have known from the beginning, already at the creditors’ meeting in April 2020, that the KPMG expert opinion is incorrect.”

Thereafter, Mr. Meyer zu Schwabedissen formulated his proposal on the basis of an expert opinion he doubted, put it to a vote and – as expressed on several occasions – voted in favor of the restructuring and the new collateral concept, contrary to his own conviction, with the votes he represented amounting to EUR 10.2 million.

Why Mr. Meyer zu Schwabedissen both agreed to a resolution based on this concept and did not immediately inform the bondholders at the latest at the time of his doubts can only be conjectured.

However, it should be noted that the bond had slipped to a price of 68% prior to the creditors’ meeting and recovered immediately to 81% after approval of the proposed resolution presented before Mr. Meyer zu Schwabedissen and to over 90% in the 2nd quarter of 2021. For the bonds represented by Mr. Meyer zu Schwabedissen, this still represents an increase in value of over EUR 2 million.

Despite his numerous reservations expressed before witnesses, Mr. Meyer zu Schwabedissen has since denied that he doubted the KPMG expert opinion at the time of the vote. However, he has confirmed that he considers the expert opinion to be flawed (today). How it can be that he provides information at a creditors’ meeting which, according to his later statements, is incorrect will be the subject of clarification at the creditors’ meeting to be convened.

Issue of a further unsecured and subordinated bond

In addition, according to our information, Mr. Meyer zu Schwabedissen, as joint representative of the convertible bond, urged Dr. Wiesent, as member of the Management Board of the issuer, to issue a further, unsecured and subordinated bond of up to EUR 50 million in April/May 2020. Among other things, the proposal also provided for an exchange of the existing bonds for the new bond. In addition, the proposal initially envisaged that the new bond would receive collateral in the real estate (companies) in return, which would have removed liability from the existing convertible bond. There was a risk that some of the creditors of the previous convertible bond would exchange their claims for the new bond, thereby improving their collateral position in relation to the other creditors.

This concept was modified by the Company to the effect that an exchange was only possible with a new investment in the same amount and no collateral was granted. Otherwise, the issue of the bond would have been disadvantageous for the Company – and also for the existing creditors. As expected, the new bond could then not be placed. With a placed volume of only EUR 15,000, the costs of the issue could not even begin to be covered. The company had previously stated that the bond would only be profitable for it if a minimum issue volume of EUR 15 million was reached.

For this bond, Mr. Meyer zu Schwabedissen was appointed as the controller for the use of funds. One of the intended uses was to use the inflowing liquidity for interest payments on the convertible bond.

Since, as described above, Mr. Meyer zu Schwabedissen already assumed at this point in time that the KPMG report was incorrect and nevertheless called for the issuance of a new bond, the question arises as to why he actively supported the issuance of the new bond and also pushed it forward in the face of resistance from other advisors to the Company and why he did not draw attention to this fact. A look at the development of the share price could provide further information. The price of the bond, in which Mr. Meyer zu Schwabedissen had represented EUR 10.2 million, had fallen to 35% in March 2020. However, in the course of marketing for the new hybrid bond, the price recovered to 55%.

Conduct of office of Mr. Meyer zu Schwabedissen

The conduct of Mr. Meyer zu Schwabedissen as joint representative also raises considerable questions. During his term of office, 11 Steering Committee meetings were held. He attended seven of these meetings, leaving the fourth meeting after about five minutes with reference to the compensation agreement he had not yet concluded with Dr. Dr. Wiesent. Mr. Meyer zu Schwabedissen remained absent from the remaining meetings, mostly without excuse.

As described above, the main task of the Steering Committee was to monitor compliance with the measures set out in the KPMG report. Mr. Meyer zu Schwabedissen did not fulfill this duty arising from his office as joint representative by, among other things, attending the Steering Committee meetings and did not properly perform the essential task of monitoring the expert opinion.

In addition, Mr. Meyer zu Schwabedissen also actively prevented the verification of compliance with the expert opinion.

In July 2020, One Square Treuhand GmbH had asked the Steering Committee about the status of the IBR and proposed that the auditing firm KPMG be commissioned to review the measures from the expert opinion. KPMG had submitted an offer for this. Mr. Meyer zu Schwabedissen incomprehensibly prevented this review. The minutes of the Steering Committee of July 30, 2020 state:

“Mr. Meyer zu Schwabedissen does not consider an immediate engagement to be necessary. Business and corporate development can also be carried out on the basis of management reporting, above all on capacity utilization and personnel development. The commissioning is therefore postponed by mutual agreement”.

If Mr. Meyer zu Schwabedissen had not prevented the review, the precarious situation at SeniVita could probably have been recognized earlier and countermeasures taken. Here, too, the question arises as to the motives of Mr. Meyer zu Schwabedissen.

Unjustified accusations against the security trustee

Mr. Meyer zu Schwabedissen repeatedly makes accusations against the collateral trustee for not following his instruction not to release collateral.

One Square Treuhand has taken up these allegations and had them examined by two renowned law firms, both of which have come to the conclusion that these allegations are groundless.

As already stated above, the collateral concept was revised at the suggestion of Mr. Meyer zu Schwabedissen and concretized unanimously at the Steering Committee meeting on July 30, 2020, i.e. also with the vote of Mr. Meyer zu Schwabedissen. The minutes of this meeting record the unanimous decision to release collateral as follows:

Adoption of the minimum purchase price list of July 1 for Weidenberg and Königsberg in conjunction with Section 7.3 of the Trust Agreement (release of collateral) and the most recent market values determined in accordance with Section 5.6.

The minimum purchase price list is binding for the sale of apartments/units. Any shortfall in the sales prices must be discussed/approved in advance by the Steering Committee.

The 3% volume discount only applies to the sale of a minimum of 3 apartment units.

For the sale of day care facilities, individual decisions remain with the Steering Committee.

In addition, the security trustee was advised and accompanied at all times by a renowned German law firm, which has been ranked among the top 10 law firms in Germany for many years. Each release was reviewed and approved by the accompanying attorneys for conformity to the procedure proposed and approved by Mr. Meyer zu Schwabedissen.

The accusations made by Mr. Meyer zu Schwabedissen are therefore groundless and the reports of alleged criminal charges on the part of Mr. Meyer zu Schwabedissen for fraud and embezzlement are also massively damaging to his reputation. This was confirmed in the meantime by two renowned law offices.

Today it is clear that the security trustee was massively deceived by Dr. Wiesent. Dr. Wiesent had transferred the incoming payments for the properties directly back to the buyer BSI 50 GmbH, which he managed, and had used the available liquidity several times within the framework of a “transfer carousel”, thus massively deceiving the security trustee.

All of these circumstances are known to Mr. Meyer zu Schwabedissen. Mr. Meyer zu Schwabedissen is also aware that the public prosecutor’s office in Bayreuth has initiated preliminary proceedings against Dr. Wiesent. We are not aware of any criminal investigations against One Square Treuhand GmbH or its management.

Financing by selected bondholders and remuneration of Mr. Meyer zu Schwabedissen

In addition, Mr. Meyer zu Schwabedissen threatens to cause further damage to the bondholders by having an amount of up to EUR 500,000 approved for legal fees for the prosecution of the proven unfounded allegations in the creditors’ meeting of August 5, 2021, which is to be deducted from the quota for the bondholders.

These costs will be financed by a group of bondholders close to Mr. Meyer zu Schwabedissen, who are largely personal members of a creditors’ advisory board appointed by him and to be remunerated by the Company. The financing bears interest at 11% p.a.. The interest as well as the repayment of the pre-financed EUR 200,000 is to be deducted from the bondholders’ quota.

In a decision that has since been published, the Frankfurt Regional Court ruled that a joint representative cannot generally be authorized to pursue claims against third parties. The costs of any examination of such claims cannot be passed on to the bondholders. Despite case law to the contrary, Mr. Meyer zu Schwabedissen is therefore attempting to burden the bondholders as a whole with costs for a law firm close to Mr. Meyer zu Schwabedissen.

Since February 1, 2021, Mr. Meyer zu Schwabedissen has received a monthly flat fee of EUR 6,000, i.e. in 2021 alone this flat fee amounts to EUR 66,000 plus expenses. Given a duration of the insolvency proceedings of around eight years, this remuneration adds up to over EUR 550,000.

In addition, Mr. Meyer zu Schwabedissen will receive an amount of EUR 50,445 for the registration of the bond in the insolvency table alone. In total, the remuneration of Mr. Meyer zu Schwabedissen will probably amount to more than EUR 600,000. Mr. Meyer zu Schwabedissen will also deduct this remuneration from the quota for the bondholders.

Conclusion: A bondholders’ meeting should be convened

It should be noted that Mr. Meyer zu Schwabedissen’s incomprehensible behavior and conduct in office have already probably caused damage to the majority of bondholders.

The security trustee has therefore been approached by a group of bondholders to prepare a call for a bondholders’ meeting. At this bondholders’ meeting, Mr. Meyer zu Schwabedissen is to report on his conduct of office and explain what motivated him to take the decisions and measures he did.

Furthermore, Mr. Meyer zu Schwabedissen shall provide information on his economic links or those of his law firm to the group of institutional bondholders represented by him, who are also represented in the so-called creditors’ advisory council. In particular, he shall comment on the question of whether there are financial agreements between Mr. Meyer zu Schwabedissen and/or his law firm and the institutional bondholders represented by him.

In order to convene such a bondholders’ meeting, a nominal volume of 5% of the outstanding nominal volume is required, i.e. approximately EUR 2.5 million. We already represent bonds with a nominal volume of EUR 2 million. If you are interested in supporting this call and in calling the joint representative Gustav Meyer zu Schwabedissen to account, you can register and support the call under.

Registration and support for the call-in demand is free of charge for bondholders.

If you have any further questions, please do not hesitate to contact the One Square team. For inquiries please use our contact details

One Square “Team SeniVita

Phone: +49 (089) 15 98 98 0

Mail: Senivita-Einberufungsverlangen@onesquareadvisors.com”

Registration and support for the call-in demand is free of charge for bondholders.

If you have any further questions, please do not hesitate to contact the One Square team.

For inquiries please use our contact details

One Square “Team SeniVita Phone: +49 (089) 15 98 98 0

Mail: Senivita-Einberufungsverlangen@onesquareadvisors.com”