Republic of Austria Opposes Restructuring of Signa Development
The Republic of Austria has filed an appeal against Signa Development's fiduciary restructuring plan, leaving the future of the restructuring process of the real estate conglomerate founded by René Benko hanging in the balance. This legal action could lead to a complete reassessment of the restructuring strategy.
The Signa properties, such as the KaDeWe, which were originally to be sold by a trust, may now be deterred. / Picture: © Wikimedia Commons; Jochen Teufel, CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0/deed.en)
The Signa Group, whose prominent projects include the Lamarr department store in Vienna, is involved in one of the largest insolvency proceedings in Austrian history. Although the restructuring plans for Signa Prime and Signa Development were initially given the green light by the creditors and the Vienna Commercial Court, the appeal by the Financial Procurator's Office is now calling these plans into question, as reported by "DiePresse".
The president of the Financial Procurator's Office, Wolfgang Peschorn, had already spoken out against the restructuring at the creditors' meeting in March and called for bankruptcy to enable a complete clarification and possibly fairer liquidation of the assets. He argued that the promised creditor quota of 30 percent could only be achieved through a significant recovery of the real estate markets, which currently seems unlikely.
Legal hurdles and possible consequences
The appeal lodged by the State Financial Procurator's Office brings the proceedings before the Vienna Higher Regional Court, whose decision will now be decisive. If the court upholds the appeal, this could overturn the entire restructuring plan and result in bankruptcy. This development could significantly prolong the process of asset realization and lead to a so-called "fire sale", in which the assets would have to be sold at significantly reduced prices.
Looking to the future
The reactions to the Republic's legal steps show the deep divisions between the parties involved. While some creditors see the restructuring plan as a last chance to recover some of their investments, others, including the Finanzprokuratur, see it as an inadequate solution.
The decision of the Higher Regional Court will not only be of great importance for the Signa Group companies affected. Still, it could also have far-reaching consequences for other insolvency cases in Austria. It is to be expected that the Republic will also appeal against the confirmation of the reorganization plan for Signa Prime, which will further escalate the conflict.
The further course of action will show whether the Signa Group will succeed in reorganizing itself or whether it will have to prepare for lengthy and possibly loss-making bankruptcy proceedings. The coming weeks will be decisive for the future of the Signa Group and its creditors.