Signa Holding crashes into insolvency

Signa Holding, the European property group that aggressively acquired retail real estate in Europe, has filed for insolvency proceedings in Vienna.

The company is owned by René Benko and is Austria's largest privately owned real estate company.

It was founded in 2000 and employs more than 150 people.

In August 2022, Central Group and Signa Holding teamed up to acquire luxury retailer Selfridges Group from the Weston Family for £4 bn (€4.62 bn). It has 18 stores in three countries - Selfridges in London, England, Brown Thomas & Arnotts in Ireland, and De Bijenkorf in the Netherlands.

Central Group revealed earlier this month it had taken full control of Selfridges after Benko said it had handed control of Signa to a restructuring expert.

In a statement on Wednesday, Signa said it had opted for a system of "self administration" which under Austrian law enables a company to restructure without the process being handed over to a third party administrator tasked with paying off debtors.

The firm said: 'Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring process could not be sufficiently secured, and so Signa Holding has now applied for reorganisation proceedings.'

Last October, the offices of Signa were raided by Austrian police. In January this year, Benko was cleared in a bribery case.

In February, Deutsche Bank cut its ties with the entrepreneur and the loss-making company.

More recent developments include the new owners of Selfridges announcing a £124 mln loss.

Benko was ousted from Signa at the start of November while rescue talks with Elliot Investment Management reportedly took place this month also to secure €400 mln to stave off collapse, but to no avail.

Swiss bank Julius Baer has a €606 mln exposure to the company, it has been revealed. Analysts believe Signa might have more than €13 bn of outstanding debts in total. 

Its property empire extends beyond Europe to include the US where it owns New York's Chrysler Building.

One of its other high profile deals was buying a majority stake in German retail chain, Karstadt. 

It later inked a deal to take control of Galeria Kaufhof real estate and associated operating businesses to merge with Karstadt. In June 2020, Galeria Karstadt Kaufhof announced plans to close more than a third of its 172 city centre locations.

In March this year, Signa sold a 49.9% stake in the KaDeWe department store property at Berlin's Tauentzienstrasse to a subsidiary of Central Group, owner of the other 51.1% stake.  

Retail property exposure seems to be the problem. Signa's statement read: 'It is widely known that, due to external factors in Europe, the retail sector – brick and mortar retail in particular – has been subjected to severe economic pressure in recent years.'

'Investments in this area did not yield the anticipated success. External factors have additionally also had a negative impact on the real estate sector in recent months.'

'Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring process could not be sufficiently secured, and so SIGNA Holding has now applied for reorganization proceedings under self-administration.'

'The aim of this structure is to reorganize the company’s own responsibilities and liabilities together with the restructuring administrator to be appointed while maintaining the value of the investments. It is also intended to conclude a reorganization plan.'

'Together with the restructuring administrator to be appointed, the management will implement further measures to ensure the continuation of business operations. In the coming weeks and months, the focus will be on implementing the restructuring concept.'

 

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