Troubled German lender Sachsen LB has warned the investors in its structured investment vehicle, Sachsen Funding I, that it may be forced to liquidate or sell its devalued assets if they do not afford the bank more time to work out a restructuring plan.

The development, outlined in a statement from the bank, comes almost a month after Sachsen LB failed to convince investors to approve a planned refinancing of the investment vehicle, which was created in May but has had its operational model completely torn apart by the credit market turmoil.