(Bloomberg) -- Adler Group SA’s €6 billion ($6.4 billion) debt restructuring faced fresh legal scrutiny in a London court as some creditors appealed the deal that saved the embattled German real estate firm from slipping into insolvency.

The plan, approved by a judge, was discriminatory according to dissenting creditors with debt maturing later that include DWS Group and Strategic Value Partners. 

“Our notes are at greatly material risk of not being paid,” Tom Smith, a lawyer for the bondholders, said at the Court of Appeal on Monday.   

Bondholders stuck with debt maturing in 2029 appealed an April ruling that gave a last minute approval to the restructuring allowing Adler to extend maturities of bonds due next year and borrow around €900 million. Adler’s lawyers said that was the only way to avoid insolvency. 

“The appeal essentially involves an attack on the judge’s exercise of discretion to sanction the plan,” Daniel Bayfield, a lawyer for Adler said in court filings. “The plan was the product of detailed lengthy negotiations and was ultimately the only restructuring proposal which commanded a significant measure of agreement.”

The hearing comes weeks after Adler sold real estate assets in Berlin and raised fresh funds offering a 21% coupon, highlighting the company’s deteriorated credit credentials. This was the first public debt sale for Adler since short-seller Fraser Perring leveled accusations of widespread fraud against the property giant two years ago, sparking a sell off in the company’s debt. Adler has denied the allegations. 

The appeal, if successful, threatens to derail the restructuring and put the company into liquidation. If Adler goes into liquidation, the creditors would recover only around 63% of the principal amounts owed to them as against being paid in full under the deal, lawyers for Adler told the court citing the April decision. 

Debt worth €3.9 billion would be paid before the 2029 bond holders placed “at the back of the queue,” Smith told the judges. “Its about the fair distribution of the risk inherent in the plan.”

Under the plan, Adler agreed to a “wind down” of the company by selling assets to repay the debt. “You’ve got a wind down taking place under the directors of the company instead of an insolvency administrator,” he said. 

Spokespeople for Adler and SVP declined to comment.

--With assistance from Luca Casiraghi.

(Updates with more from the court hearing throughout)

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