(Bloomberg) -- The day before Ilija Batljan stepped down from troubled Swedish landlord SBB, creditors sent a letter to the firm’s board claiming it had breached the terms of its bonds.

A group calling itself “B2023 Funds,” which had taken up holdings in the company’s so-called social bonds, said Samhallsbyggnadsbolaget i Norden AB had breached a key financial covenant, according to a letter seen by Bloomberg. That would trigger an “event of default” on those securities and allow investors to demand repayment of the notes once a 90-day grace period expires on June 29, according to the letter sent by international law firm Cleary Gottlieb Steen & Hamilton LLP.

In the letter dated June 1, Cleary didn’t specify whether it was representing multiple funds or just one. Helena Lindahl, SBB’s head of investor relations, declined to comment, as did Cleary. 

Just a day later, Batljan — SBB’s founder and dominant shareholder — stepped down as chief executive officer. The shock move came shortly after Batljan spoke to investors in London about selling individual assets as well as the whole company.

Batljan, 55, was the driving force behind SBB’s rapid, debt-fueled expansion and became embroiled in the company’s turmoil. His credibility was damaged after a series of statements dismissing the company’s vulnerabilities.

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The letter said holders of the bonds are open to discussing options for the company to deal with the default “in a manner most value-maximising to all stakeholders.” It set a deadline of June 30 for the discussions.

SBB’s social bonds rose almost 2 cents on the euro, according to data compiled by Bloomberg. The news of Batljan’s exit and reports of investor interest in SBB’s assets saw the company’s share price soar 55% since Thursday. 

The alleged breach of financial covenants alludes to a so-called coverage ratio that the holders say the company has failed to maintain since March 31. The holders demanded a full response by June 15, the letter states.

Analysts had noted a potential breach in SBB’s bonds last month, prompting a statement from the company last week stating that it “meets the consolidated coverage ratio as the covenant is calculated.”

--With assistance from Libby Cherry and Christopher Jungstedt.

(Updates with bond and share price in seventh paragraph.)

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