The vast Signa conglomerate is crumbling like a house of cards. Now, the holding company of Austrian real estate investor René Benko has also filed for insolvency. Other subsidiaries are likely to follow.
Signa Holding submits an insolvency application to the Commercial Court in Vienna, as stated in a company announcement on Wednesday. The request is for a restructuring procedure with self-administration.
Bankruptcy Cascade
Furthermore, the acceptance of a restructuring plan has been demanded. The goal is «the orderly continuation of the operational business within self-administration and the sustainable restructuring of the company,» as stated in the communiqué.
This puts the main pillar in the corporate network of Tyrolean investor René Benko at risk. On Monday, Signa Real Estate Management Germany in Germany had already filed for insolvency. At the end of October, Signa's sports retail division took the same path.
Growing Problem for Julius Baer?
The heavily indebted corporate conglomerate has faced difficulties in recent months. It is generally suspected that Swiss bank Julius Baer is among the lending banks.
The bank itself has neither confirmed nor denied the customer relationship so far. However, the market assumes that the bank's mentioned «European conglomerate,» in which Julius Baer has an individual commitment of 606 million Swiss francs in the Private Debt sector, is Signa. A week earlier, the bank had reported provisions of 82 million Swiss francs for loans.
It has also been rumored that among Julius Baer's collateral are shares of Signa Holding. With the declared insolvency, these would be practically worthless.
Weakness in Retail and Real Estate Crisis
Signa is invested not only in real estate but also in the retail sector. This includes the German department store chain Galeria Kaufhof, Kika/Leiner, and Globus in Switzerland.
If a self-administered restructuring, as requested by Signa, were to occur, it would mean a 30 percent quota for the creditors, according to the Austrian newspaper «Der Standard.» This implies that with a restructuring plan, creditors would have to be offered at least a 30 percent repayment of debts.
The party responsible for overseeing the restructuring has not been disclosed. However, leadership could potentially fall to German expert Arndt Geiwitz, brought in by Benko.
