René Benko is to sell Signa shares in the Chrysler Building

2023-12-19 21:29:16

The ailing Signa Holding is initially allowed to continue to restructure itself. The Vienna Commercial Court agreed to this on Tuesday. However, the restructuring manager, the lawyer Christof Stapf, gave the holding company a damning certificate after the first creditors’ meeting. There was a “lack of management capacity with comprehensive knowledge” in the group’s middle management. The holding company has “recently only partially fulfilled its control function”.

Further safeguards are necessary to finance the complex procedure. The Signa founder and long-time head of the real estate empire, René Benko, has so far only made or promised grants totaling 3 million euros. In order to meet the claims of creditors, Signa will probably have to divest itself of investments such as the Chrysler Building in New York and shares in Austrian media.

The lawyer’s message makes it clear how intricate the Signa construct is: “Continuing the proceedings requires regaining control over individual parts of the Signa group of companies, to the extent that this is still possible,” it said. Stapf advocated that a steering committee be set up to restructure the entire group. In Signa Holding’s insolvency application, 53 direct investments in companies and indirect investments in several hundred other companies are noted. The group’s organizational chart consists of 46 pages in A3 format.

43 creditors are demanding 1.1 billion euros

With debts of 5 billion euros, Signa Holding is the largest insolvency case in Austrian economic history. 273 creditors are on the list from the company’s bankruptcy filing. These include consulting companies, law firms, savings banks and other banks, helicopter rental companies and Signa subsidiaries. So far, 43 creditors have registered their claims amounting to around 1.1 billion euros; the deadline for further claims ends on January 15th. It is still unclear whether claims will actually be filed for the entire debt amount of 5 billion euros.

In order for the restructuring plan to be approved in February, the ailing company needs a so-called double majority of creditors. This means that at least half of the creditors must agree to the plan and they must also hold at least half of the liabilities. A quota of 30 percent, which must be at least available for the creditors, is also crucial for restructuring under self-administration.

This is significantly more than in the past insolvencies of the Signa subsidiary Galeria Karstadt Kaufhof, in which the creditors received a low single-digit percentage. For Signa, this means that the group will have to raise up to 1.5 billion euros in the next two years to meet this quota.

Two important companies are on the brink

The restructuring administrator, Stapf, announced that numerous business transactions would have to be reviewed to ensure that Signa’s proposal for self-directed restructuring was appropriate. The data backup was started “with considerable delay”. In order to raise money, Signa is recruiting investors, with up to 600 million euros in financing for the restructuring of the ailing real estate group.