Sidley Austin’s London-based international finance group restructured approximately €3.5 billion ($4.8 billion) of debt including around €1.13 billion of CMBS notes issued by Fleet Street Finance Two.

The transaction is the first CMBS securitization in Germany to be fundamentally restructured and is one of the largest and most complex restructurings in the German market. The principal reason for the restructuring was the sole underlying tenant, Karstadt, going into bankruptcy in Germany.

The restructuring included an extension of the maturity of the various classes of bonds issued in the CMBS by Fleet Street Finance Two and an increase in the coupon payable to certain classes of bondholders.

“The restructuring of the CMBS Notes could pave the way for the renegotiation of billions of euros of complex property financings,” Sidley Austin said in a statement. “Many investors in CMBS have struggled to restructure these complex financings as the property backing them has plummeted in value.”

Euan Gatfield, analyst at Fitch Ratings said that the availability of this course of action will dispel the automatic assumption that structured vehicles inevitably become forced sellers as they approach legal maturity.”

In the case of Fleet Street Finance Two, one bondholder described the restructuring as “an enormous task” because of the large number of lenders involved.

Led by Sidley partner Graham Penn, the team included partner Jason Richardson and associates Lisa Cargill, Paul Gray and Andrew Macdonald.

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