STUTTGART (dpa-AFX) - The wheels of justice turn slowly. Nearly ten years after the insolvency of the still-unfinished Schwabenlandtower in Fellbach, near Stuttgart, this delay may work in favor of the two former investors and managing directors of the high-rise project.
Following the reading of the indictment and a consultation with all parties on the first day of the trial, the Stuttgart Regional Court proposed dismissing the criminal proceedings in exchange for a fine. The presiding judge cited the looming statute of limitations on the charges, the multi-year duration of the proceedings, and the brief window of the alleged delay in filing for insolvency. The public prosecutor's office did not immediately comment on the proposal made by the commercial criminal chamber.
The two defendants, a father and son now aged 79 and 46, are charged with insolvency fraud and market manipulation regarding Baden-Wuerttemberg's tallest unfinished residential building. Despite being illiquid as of May 2016, the defendants allegedly failed to file for insolvency for over five months. The prosecutor stated that the defendants had known since May that they were no longer able to meet their payment obligations.
The presiding judge described it as an 'atypical insolvency'. He noted that the period of insolvency delay was brief, that the defendants had disclosed their financial difficulties, and that a 'community of fate' existed between the construction firm and the investor. At the same time, the judge emphasized that the indictment was well-founded. The investigation alone lasted five years. A spokeswoman for the public prosecutor's office had previously pointed to the complexity of the case. The files also sat with the court for an extended period; the main proceedings were only opened at the beginning of this year.
Indictment: Bond price manipulated
To finance the overall project of the 107-meter-high residential tower and hotel, a bond with a total value of up to 35 million euros was issued in 2014, carrying an annual interest rate of 6.5 percent. According to the prosecution, the duo provided investors with false information regarding the economic situation and the construction progress of the high-rise to artificially stabilize the bond's market price. For instance, the defendants denied rumors of financial distress in a newspaper interview. Furthermore, misleading information was allegedly provided in a mandatory stock exchange filing. In reality, however, the further financing of the construction project remained unresolved, according to the indictment.
The construction ruin on the outskirts of Fellbach is a prominent landmark. The Schwabenlandtower has an inglorious, years-long history of bankruptcies and broken promises. Construction began in 2014 on what was then called the Gewa Tower, planned to house 66 high-end apartments, commercial spaces, and a hotel.
How did the project evolve after the bankruptcy?
Following the insolvency of the original developers now under indictment, a years-long period of uncertainty began. The new owner imposed a new concept on the building. After years of standstill, a new project developer briefly began converting the planned luxury apartments into smaller, more affordable rental units. However, the construction site has been dormant again for years. Critics have dubbed it 'Germany's most expensive birdhouse' because a pair of falcons had nested at its heights. Others called it the 'McTower with Premium Lounge' due to a nearby American fast-food restaurant that never quite aligned with the premium aspirations of the luxury residential project.
Most recently, the shell was owned by the struggling Adler Group. The real estate conglomerate is now passing it on. A spokeswoman said a contract for the planned sale of the Schwabenlandtower project has been signed. 'The change of ownership has not yet taken place and remains subject to various conditions.'
How is the municipality handling the ruin?
Just days after Mayor Gabriele Zull (independent) took office in 2016, the original developer finally fell into financial distress. Zull remarked: 'Since then, there have been various approaches from investors to complete the project.' She expressed strong hope that the current negotiations between the owner and the investor would reach a positive conclusion - 'especially since we need every apartment in the region'. She added that it is not the task of the city administration to complete a private construction project using taxpayer money.
Mayor Zull is counting on the future new investor to finish the structure: 'In recent months, some dismantling work has taken place.' Once negotiations are concluded, the investor will certainly report on the progress. The prospective investor could not initially be reached for comment./ols/DP/jha
