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KaDeWe, Germany’s most famous and exclusive department store, filed for administration on Monday, becoming the latest casualty of René Benko’s crumbling property empire.
Management of the 116-year-old Berlin institution said that despite booming sales they could not afford to pay rising rents demanded by the Signa Group and the business needed urgent restructuring.
Signa co-owns the KaDeWe operating company with Thailand’s Central Group, but it separately owns the KaDeWe building. The steep increase in the valuation of the building under Signa’s ownership was justified by the rents that could be squeezed from its captive tenant.
The disaggregated model — whereby Signa split ownership of the properties from their tenants — was a key part of the way Benko raised billions of debt and aggressively expanded across Europe’s luxury property sector over the past decade.
For Signa’s hundreds of creditors, it is now proving a problem. Different divisions and holding companies within the group are at loggerheads over who is owed what and who has claims on which collateral after the group’s finances began to unravel in November.
In Vienna on Monday, the administrator for the group’s central company, Signa Holding, said it alone was facing €3.5bn more in claims from creditors than previously disclosed.
Christof Stapf, who took control of Signa Holding last week after a restructuring by management failed, told creditors that in total 302 parties had listed outstanding debts of more than €8.6bn. The company’s management said in its insolvency filing on November 29 that it expected claims totalling about €5.1bn.
The claims lodged include €713mn from the UAE’s Mubadala and €279mn from Qatar’s AM1, and €1.6bn that other Signa group entities said was transferred to the central holding company in the run-up to its collapse.
Presenting his findings to creditors, Stapf said he intended to dispute almost all of the debts, according to a readout of the meeting seen by the Financial Times.
In particular, he said he would refuse to recognise the claims made by other Signa group entities.
Those include the two other holding companies Signa Development and Signa Prime, which owns the KaDeWe building. Management and separate administrators at the two companies are rushing to monetise assets to pay off their own lenders.
Stapf’s decision is likely to greatly complicate their efforts.
Signa Development transferred hundreds of millions in cash to other Signa entities in the past year, which the company’s management said at the time were “ordinary . . . business cash management operations”.
Creditors have been left dumbfounded at the absence of cash on its balance sheet despite large asset sales in the past year. The FT reported last week that the company also transferred more than €300mn to non-Signa group entities controlled by Benko’s family foundation.
“Co-ordination with the other insolvency administrators of the Signa group in the form of a cross-group steering committee was not possible due to the different interests, despite considerable efforts by the insolvency administrator of the holding company,” Stapf told creditors on Monday.
Signa’s total debt — spread across an unconsolidated network of more than 1,000 companies built up over the past decade by Benko — remains unknown, but Stapf’s disclosures will fuel concerns among creditors that it may be significantly larger than anticipated.
Analysts at JPMorgan estimated in November that Signa entities owed a total of €13bn.
