The European real estate landscape has been shaken by the recent collapse of Signa Group, once a titan in the industry led by the now-disgraced real estate mogul René Benko. While Signa Holding already filed for insolvency, two key companies are following: Signa Prime Selection filed for self-administrated restructuring in a Vienna court on Thursday, and Signa Development Selection will file on Friday.
Over-Valued Assets And Balance Sheet Manipulations
Signa Holding, a group of some 1,000 companies, with high-profile projects and department stores across Germany, Austria and Switzerland, filed for insolvency late November 2023 with around €5 billion in debt.
On Dec 28, 2023, Signa Prime Selection is Signa‘s largest real estate division with 54 properties with a Gross Asset Value of €20.4 billion followed its parent company and filed for insolvency. The company’s over-indebtedness is startling, with Signa Prime‘s assets estimated at €1.3 billion against a debt of around €3.2 billion. A report by JPMorgan escalates this figure, suggesting that the total of Signa Prime‘s debts could be as high as €10.7 billion, primarily due to outstanding bonds.
Despite these high-value assets, the company struggled to maintain liquidity and failed to secure enough funds for an out-of-court restructuring. This failure has led to a restructuring plan aimed at preserving the company’s investments and continuing business operations.
Investigations have suggested that Signa had been systematically overvaluing its real estate assets, contributing to its financial distress. The balance sheets were repeatedly submitted late to the Austrian company register and corrected retrospectively. It is now also known that Reno Benko rented out Signa‘s office space to other companies in his group at inflated prices and thus intentionally overvalued the properties. It remains to be seen to what extent this will have consequences under criminal law.
The Record-Setting Signa Bankruptcy Case
With liabilities of around five billion euros, Signa Holding‘s insolvency was already a record in Austrian corporate history, but the debts of Signa Prime and Signa Development could turn this into one of the largest bankruptcy cases in the European history.
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We are currently working on a comprehensive report on the Signa Group and Rene Benko. If you have any information about Signa, its actors and activities, please let us know via our whistleblowing system, Whistle42.
