FRANKFURT (Reuters) - Struggling German property group IVG Immobilien
A German court started insolvency proceedings on Friday against the firm - co-owner of London's landmark 'Gherkin' tower - after it sought protection from creditors in August.
The company was working on a reorganisation plan including a debt-for-equity swap that aimed to shed many of its liabilities and strengthen its depleted capital base, Chief Executive Wolfgang Schaefers said.
"Our plans foresee the lifting of the (insolvency) proceedings for the first half of 2014, but we have the ambition of already being able to do so as early as spring," he said.
Shares in the penny stock jumped 52 percent to 0.11 euros by 1124 GMT, up from Thursday's close of 0.07 euros, as the likelihood of a complete liquidation of IVG receded.
IVG intends to submit the plan, which it is developing under its own administration, to the court prior to Christmas and schedule a vote for its creditor committee in January, it said.
A member of the German mid-cap MDAX <.MDAXI> index until September 2011, the company's market value has plummeted 96 percent since January.
One of Germany's best known real estate firms, IVG amassed over 4 billion euros (£3.45 billion) in debt during a rapid expansion when it financed a business-and-hotel complex located at the Frankfurt airport called "The Squaire" that suffered from cost over-runs.
It was also hit by growing unwillingness among European banks to provide new loans, a consequence of a continent-wide credit crunch and new regulations forcing lenders to cut their exposure to property.
Schaefers said the firm had used its time under creditor protection "to create the prerequisite for a successful restructuring."
Creditors had rejected a previous debt-for-equity swap that IVG proposed in August, which would have all but wiped out existing shareholders.
IVG benefited from a change in insolvency laws that Germany adopted in March 2012, making it easier for financially stretched companies to implement a U.S.-style reorganisation within a few months by adopting a debtor-in-possession approach that is the hallmark of Chapter 11.
Previously, an administrator would typically take over an insolvent German company with the aim of either selling it to a strategic investor or winding it down, with management removed from all decision-making functions.(Reporting by Christiaan Hetzner and Kathrin Jones, additional reporting by Brenda Goh, Editing by Thomas Atkins, John Stonestreet)