Bankrupt Signa Holding faces a “hussar ride”, according to Gerhard Weinhofer, managing director of creditor protection association Creditreform Austria.
In addition to the continuation of the company, it is important to evaluate whether, under great time pressure, the proposed 30 percent quota is suitable for creditors based on actual assets. In an interview with APA, Weinhofer said the question also arises of whether the quota can actually be met.
Time is running out with Signa bankruptcy
With a commitment of 5 billion euros, approximately 1.5 billion euros will need to be paid to creditors within two years. However, the liquidation value payable in the event of a forced sale is currently only €314 million. Weinhofer predicts that creditors are unlikely to settle for the minimum quota if it turns out that assets need to be valued at a higher value during the restructuring process.
Signa’s real estate assets are largely secured by mortgage banks
The bankruptcy expert also points out that Signa’s real estate assets are largely secured by mortgages obtained from banks. This means banks should be given priority when property is sold. However, this may create problems for other creditors whose receivables are not secured. However, it is not in the interest of creditors to reduce prices by putting properties on the market.
Weinhofer thinks the extent of the bankruptcy is “sporting”
Time is of the essence in valuing assets: Creditors must accept the holding company’s restructuring plan as early as February, i.e. in less than 90 days. Weinhofer said he thought it would be “sporting” to have all open questions clarified by then, given the magnitude of the bankruptcy. Everyone involved, including not just the bankruptcy administrator but also creditors’ guardians, can expect a “show of force.”
Evaluation of Signa Holding’s bankruptcy in just a few weeks
Signa Holding’s bankruptcy manager, lawyer Christof Stapf, will only be able to evaluate in a few weeks whether his plan to restructure the company, which has debts of up to 5 billion euros, will work. Only at the Dec. 19 reporting meeting “will there be an assessment of how realistic the financial plan presented is and whether the restructuring plan can be fulfilled,” Stapf told APA on Thursday.
On Wednesday evening, Stapf was appointed insolvency administrator of the umbrella company of the Signa network of companies around Tyrolean real estate investor Rene Benko. With debts of 5 billion euros, this is the largest bankruptcy in Austrian economic history.
Stapf: “We immediately started examining the economic situation of the company”
“We immediately began to examine the economic situation of the company,” explained Stapf, who, along with law firm partner Michael Neuhauser, oversaw the self-managed restructuring process. Signa Holding’s bankruptcy differed from usual restructuring procedures due to its size and complexity. “The detailed review will take all the time until the first reporting meeting,” said Stapf, who did not want to comment further on the procedure until then.
This isn’t Stapf’s first major bankruptcy case; He was a liquidator at Yline, the Vienna Ringstrasse hotel “Le Meridien” and the fashion chains Mister*lady and Pimkie. He also covered the bankruptcy of gambling entrepreneur Peter Zanoni’s Montesino poker casino.
First creditors’ meeting in Signa on 19 December
The first reporting meeting and first creditors meeting at Signa will be held on December 19. The audit meeting will be held on January 29, and the renewal plan meeting will be held on February 12. The deadline for registration for creditors owed by Signa Holding is January 15, 2024.
The real estate empire that Benko built has grown rapidly in the zero-interest era over the past few years, primarily taking over commercial properties. Signa management admitted on Wednesday that investments in this area did not bring the expected success. The group includes numerous commercial properties in Germany and Austria, as well as German department store group Galeria Karstadt Kaufhof, which has already gone through two bankruptcy proceedings. Signa is currently building the 245 meter high Elbtower in Hamburg. The project is currently at a standstill because Signa can no longer cover the monthly construction cost, which is said to be 25 million euros. The same applies to various construction sites in Germany, such as the Alte Akademie site in Munich. It is unclear what will happen next in Vienna for the large Lamarr construction site at the former Leiner location on Mariahilfer Straße. The luxury store was planned to open in 2025, and so far only the reinforced concrete frame remains standing.