Vienna Commercial Court Establishes Creditors' Committee for Signa Holding
The Austrian Signa Holding, founded in 2000 by René Benko, is currently facing major challenges. The Commercial Court of Vienna has set up a creditors' committee for the ongoing reorganization proceedings to examine the non-transparent structures of the Signa Group and to decide on the reorganization plan offered by Signa.
The Commercial Court of Vienna, which is located in the Justice Center Vienna-Mitte, has set up a creditors' committee for the ongoing restructuring proceedings of Signa Holding. / Picture: © Wikimedia Commons/ Otto Normalverbraucher / CC BY-SA 2.0 AT DEED (https://creativecommons.org/licenses/by-sa/2.0/at/deed.en)
Signa, a major real estate and retail company, has undergone expansive development in recent years. Signa acquired Karstadt in 2013 and merged the department store chain with the acquired Galeria Kaufhof in 2018. Despite this expansion, however, the retail giant repeatedly ran into financial difficulties and had to apply for protective shield proceedings in 2020. A second protective shield procedure ended in June 2023, but the financial problems persisted and ultimately led to the filing of a restructuring procedure with self-administration, as reported by Vindobona.org.
The Commercial Court of Vienna has taken a decisive step in the reorganization proceedings of Signa Holding by setting up a creditors' committee, as reported by ORF. This was announced today by the Alpenländische Kreditorenverband or Alpine Creditors Association (AKV). The formation of this committee, which has already been called for by creditors' associations, is intended to help clarify existing uncertainties - such as debts, restructuring plans, and further procedures - more effectively.
The AKV, as one of three members, was appointed to the committee. The association emphasizes the importance of a creditors' committee as a central component of creditor participation in insolvency proceedings.
The AKV considers the convening of the committee to be "necessary and expedient". It is emphasized that the opaque structures of the Signa Group must be clarified as quickly as possible to enable effective restructuring within the planned 90 days. This is crucial to decide on the appropriateness and feasibility of the restructuring plan proposed by Signa.
At the time of filing for insolvency, Signa Holding had debts of approximately five billion euros. The company is proposing a restructuring ratio of 30 percent, payable within two years, which corresponds to approximately EUR 1.5 billion. So far, claims amounting to 1.13 billion euros have been registered.
Despite the ongoing proceedings, Signa Holding remains in self-administration, as the AKV believes that this does not currently entail any disadvantages for creditors. Cooperation with the debtor is proceeding smoothly and all necessary information is being provided, the AKV said in a preliminary announcement for tomorrow's creditors' meeting.
Following the closure of various parts of Signa Holding - areas such as hunting, flight, security, and event management were affected - only eight of the original 42 employees are now still working at the company. These are necessary for the continuation of the restructuring process.
Consequences of the insolvency
The Signa Group's insolvency has far-reaching international repercussions, as reported by Vindobona.org. Over 100 banks, including the German Landesbanken and the Swiss asset management company Julius Bär, have lent money to the Signa Group. The crisis in the real estate market, characterized by high construction costs, inflation, and rising financing costs, is also reflected in Signa's insolvency and led to a write-down of 1.17 billion euros at Signa Prime Selection in the previous year.
The future of the Galeria department stores, a central component of Signa Retail, is uncertain. One option could be the sale of the department stores, with trade unions hoping that a new owner will be found who is better than a pure real estate investor. Signa's insolvency is also causing unease among banks, as the company was heavily dependent on bank loans. For example, the Swiss private bank Julius Baer has already made write-downs of 70 million Swiss francs, while the potential default volume is around 600 million Swiss francs.
The insolvency of the Signa Group not only has an impact on Benko's future but also affects the Austrian economy and politics as a whole. For smaller construction companies in particular, which were dependent on contracts with Benko, the insolvency could lead to serious liquidity problems. It could also lead to increased caution in lending by banks, which would make construction projects even more expensive. This could have a long-term impact on the development of city centers, especially if Signa's projects in central locations are affected.