Signa Crisis Intensifies: Concerns About “Bankruptcy Within Bankruptcy” Due to Billion-Dollar Ruling in Paris
The already complex insolvency situation of the Signa Group is now threatened by a new financial blow. An imminent ruling by the International Chamber of Commerce (ICC) arbitration court could ruin the local proceedings—even before the first installment is paid to creditors.
A working trip of former Chancellor Sebastian Kurz (m.l.) in the United Arab Emirates with Rene Benko (l.) and with Crown Prince Mohammed bin Zayed Al Nahyan (center right). / Picture: © Bundeskanzleramt (BKA) / Dragan Tatic
In the coming days, the financial world will be looking to Paris with bated breath. News reports say the sovereign wealth fund Mubadala from the United Arab Emirates (Abu Dhabi) has filed a massive arbitration claim against René Benko and various Signa companies. The amount in dispute is around €900 million. Mubadala accuses the Signa founder and his former empire of violating financing agreements.
The sword of Damocles of legal costs
However, the problem for the Austrian insolvency administrators is not just the potential billion-euro debt itself. Rather, it is the immense costs of the arbitration proceedings—where two parties resolve a dispute outside of court—that are causing concern. Since Mubadala has chosen to proceed through the International Court of Arbitration (ICC), a global institution for settling commercial disputes, instead of filing a regular declaratory action before an Austrian civil court, fees and costs amounting to millions have been incurred.
Insiders warn the APA news agency of a so-called “insolvency,” as reported by ORF. Experts are already talking about “bankruptcy within bankruptcy.” This means that at the end of the day, there may not even be enough money in the insolvency estate to cover the ongoing costs of the proceedings—an absolute worst-case scenario for creditors.
Political controversy and legal hurdles
The case is also politically sensitive: René Benko was part of an official delegation led by then-Chancellor Sebastian Kurz that visited Abu Dhabi to cultivate relations with the sovereign wealth fund. Today, the former partners are facing each other in court. Although Mubadala's request for summary proceedings was rejected at the end of 2023, reports indicate that the main ruling is now expected and has already been finalized.
Creditors on hold
In Austria, Mubadala's claims have been consistently disputed in the insolvency proceedings to date. If the arbitration tribunal now rules in favor of the Arabs, the legally controversial question arises as to whether this ruling can replace a national declaratory action. Karl-Heinz Götze from the credit protection association KSV1870 emphasizes the “great tension” with which the ruling is awaited, as it could drastically reduce the distribution pool for all other creditors, as reported by ORF.
While the parties involved await the formal delivery of the ruling, which could happen at any time, one thing is clear: the Signa chapter is far from over – and could end up being even more expensive for many of those involved than previously feared.