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Signa Group’s Troubles Deepen as Development Arm Files for Bankruptcy
The problems of the Signa Group are escalating further. Following the final collapse of the restructuring plans for Signa Prime Selection AG, its subsidiary, Signa Development Selection AG, has now also taken the path to insolvency.
The Supreme Court of Justice (OGH) rejected the appeals of Signa Development and a German investor on Monday, as announced by the Vienna Commercial Court. This clears the way for a bankruptcy proceeding.
Restructuring Plan Fails
The trust-based restructuring plan, which envisioned a repayment of 30% of the debts within two years, was already rejected by the Vienna Higher Regional Court in August 2024, at the request of the Austrian Financial Prosecution Office. The OGH’s latest decision confirms this line. According to the trustee, Andrea Fruhstorfer, the self-administration of Signa Development will be suspended shortly.
Fruhstorfer emphasizes that until the last moment, intense efforts were made to structure the disposal of the assets to ensure a orderly winding-down. The priority is to achieve the best possible satisfaction of the creditors. She is supported by Arno Maschke.
However, the disposal of the company’s assets could prove extremely challenging. Fruhstorfer highlighted that the loss of trust among stakeholders and the loss of the management group significantly complicate the planned measures. Despite these obstacles, she expressed confidence in her ability to tackle the upcoming tasks with engagement and goal-orientedness.
Signa Development’s Debts Amount to Around €1.16 Billion
The goal is now to liquidate the company’s assets in the interest of the creditors in the best possible way.
Background of the Crisis
The Signa Group, founded by the controversial real estate magnate René Benko, has been under increasing pressure in recent years. The aggressive expansion and high foreign financing of the company group led to significant risks. The most prominent assets in the portfolio include the Berlin KaDeWe and the Hamburg Elbtower.
In December 2023, Signa Prime Selection AG and Signa Development Selection AG had nearly simultaneously filed applications for self-administered restructuring proceedings. While Signa Prime, with debts of around €6 billion, has already been sent into insolvency, Signa Development is now finally facing the end.
Far-Reaching Consequences for the Market
The bankruptcies of the Signa subsidiary companies could have far-reaching consequences for the European real estate sector. As one of the largest players in this market, the Signa Group has financed and realized significant projects in Germany, Austria, and Switzerland for decades. Experts fear that the liquidation of the assets could not only affect investors, but also tenants and construction projects.
Another aspect concerns the creditors: Many of them are banks and institutional investors, who must now prepare for significant write-downs. Furthermore, the developments shed light on the risks of highly indebted real estate companies that face stagnant or declining markets.
The Future of the Signa Group
With the bankruptcy of the two subsidiary companies, the future of the entire Signa Group seems uncertain. Insiders are already speaking of a possible sale of further assets to stabilize the remaining business areas. Whether this is enough to regain the trust of market participants remains to be seen.
The insolvency proceedings will be closely monitored in the coming months. For creditors, investors, and the real estate market as a whole, the end of the Signa Group could become a precedent that will significantly change the rules of the game in the industry.**