Signa insolvency: Ex-managers to be Liable for One Billion Euros
Insolvency administrator Norbert Abel is stepping up the pace in the case surrounding the spectacular insolvency of Signa Prime Selection AG: 13 months after filing for insolvency at the end of November 2023, letters of liability were sent to former members of the company's Management Board and Supervisory Board shortly before the turn of the year.
“The Icon Vienna”, which houses prominent companies and diplomatic missions, is one of the many Signa properties causing financial difficulties for Rene Benko. / Picture: © Wikimedia Commons; User:Geolina163, CC BY-SA 4.0 DEED (https://creativecommons.org/licenses/by-sa/4.0/deed.en)
The events surrounding the Signa insolvency shed light on the behavior of managers and controllers in crises. Experts also see the case as a reminder to other companies to recognize financial risks early on and deal with them responsibly. According to information from a lawyer's letter, as reported by “DiePresse”, Insolvency administrator Norbert Abel is demanding liability from a total of 16 former managers and controllers of the company for damages of at least one billion euros.
Serious accusations against the management
The affected members of the Management Board include Manuel Pirolt, Timo Herzberg, Tobias Sauerbier, and Claus Stadler. The claim is also directed against former members of the Supervisory Board, including former Austrian Chancellor Alfred Gusenbauer. The insolvency administrator accuses the former managers of serious breaches of duty, acting in breach of duty, and delaying insolvency. It can be assumed that Signa Prime Selection AG had been materially insolvent since March 31, 2022, at the latest, the letter states. Both the Management Board and the Supervisory Board should have recognized this and taken appropriate steps, such as filing for insolvency.
Particularly explosive: there are said to have been increasing indications of financing difficulties as early as 2019. Despite these signs, according to Abel, neither sufficient measures were taken nor a corresponding insolvency application was filed, which led to a significant increase in liabilities.
“Beer mat” calculations and inadequate financial planning
Signa Prime's lack of liquidity planning is a particular point of criticism. According to insolvency administrator Abel, only rudimentary calculations in Excel format were submitted, which in no way met the requirements of a large company. These improvised calculations, which Abel described as “beer mat calculations”, contained arbitrary and legally unfounded transfers from companies outside the group in the three-digit million range. It was also found that the entire available liquidity within the group was treated as freely available without taking into account the financial situation of the individual subsidiaries.
One particularly serious incident was the payment of over EUR 252 million in 2023 to Signa Prime Holding GmbH, which was also in financial difficulties. These transactions took the form of subordinated loans, so-called “upstream loans”. Abel described these payments as unique in Austrian economic history, as they were made in favor of the majority shareholder and non-affiliated companies. Breaches of duty and possible further claims The former supervisory board members of Signa Prime Selection AG are also the focus of the allegations. They are accused of not having properly monitored the management board and not having worked towards the initiation of orderly insolvency proceedings.
According to insolvency administrator Abel, the entire Supervisory Board should have recognized in the course of 2022 at the latest that the company was materially insolvent. In addition to the claims already made, Abel reserves the right to assert further liability claims if new findings emerge. “The investigation is still ongoing,” said the insolvency administrator, as reported by ORF. Given the complex structure of Signa Prime Selection AG, it cannot be ruled out that further claims will be made against former managers.
An unprecedented case in the Austrian economy
The insolvency of Signa Prime Selection AG represents one of the largest corporate collapses in recent Austrian economic history. The company, which was founded by the well-known real estate investor René Benko, held numerous luxury properties in Austria and abroad. After years of rapid growth and aggressive expansion, the company increasingly ran into financial difficulties from 2022 onwards. It finally filed for insolvency at the end of 2023.
Deadline for acknowledgement of liability
In a final step, insolvency administrator Abel called on the former executive bodies of Signa Prime Selection AG to acknowledge their liability on the merits. The deadline for acknowledging liability was set for January 20, 2025. If no agreement is reached by then, the affected managers and supervisory board members face a lengthy legal dispute.
In some cases, Abel has already initiated the recovery of fees paid to former managers. In some of these cases, repayments have already been obtained, according to internal sources. The economic consequences of the insolvency of Signa Prime Selection AG will continue to be a central topic for the Austrian public. Financial experts and analysts are keeping a close eye on developments, as the case could have a signal effect on the entire real estate sector.