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Creditors to the two biggest companies in René Benko’s property empire will receive just €2.5bn back, from more €15bn of claims, according to a five-year windup plan approved on Monday.
The haircut underscores the distress in the European commercial property market — in which Signa Group companies must now sell assets — and raises fresh questions over the opaque way the sprawling group was run by its Austrian founder.
Signa Prime and Signa Development own the majority of the Signa Group’s properties: a portfolio of inner-city construction projects and luxury addresses — from designer shopping precincts to 5-star hotels — which Benko once boasted was rivalled in prestige only by the holdings of the British royal family.
The administrator for Signa Prime said on Monday that the Innsbruck-based company had received claims totalling €12.8bn against it, of which €5.9bn had been recognised as legitimate. The current restructuring plan will result in 30 per cent debts owed to recognised creditors being returned.
Signa Development’s administrator said the company had received €2.3bn of claims, of which €1.5bn were recognised. A return of 30 per cent is also predicted for those creditors.
“I am convinced that with the present restructuring plan and the structured trust sale process we have achieved the best solution for the creditors,” said Signa Development administrator Andrea Fruhstorfer.
A spokesperson for Signa Prime’s administrator, Norbert Abel, confirmed outline details of the restructuring plan but declined to comment further.
Both Signa Prime and Signa Development will pay creditors over the next two to five years.
The two companies are only part of the Signa Group. The futures of Signa Holding, the parent company of the two, and Signa Retail, a third sister company, are still undecided. They both owe many billions of euros more, with even less secure collateral, according to their own administrators.
Signa collapsed last year as rising interest rates sunk its debt-fuelled expansion model. Under Benko’s direction, the group honed a modus operandi of buying unloved but high-potential properties in city centres, redeveloping them, inviting in ultra-luxury tenants, and then giving them high valuations.
The group typically then used those valuations to secure more borrowing and repeat the process.
It grew to hold a range of luxury addresses which include the Chrysler Building in New York and Selfridges in London.
It fractured after its collapse, however, with creditors and shareholders vying over collateral and liabilities across the network of more than 1,000 different companies that underpin its holdings.
Some now allege criminal behaviour at the group, and have asked Austrian investigators to open a case.
Hundreds of millions of euros of transfers have occurred in the company before its collapse, which creditors say are unusual.
Munich’s state prosecutor said last week it had opened a money-laundering investigation.
