As one of the creditors of the insolvent Signa companies owned by investor René Benko, the Republic of Austria will not agree to the proposed restructuring plans. Wolfgang Peschorn, President of the Austrian Financial Procuratorate and thus the Republic’s lawyer, said this to ORF Radio.
The Signa bankruptcy is the largest bankruptcy in Austrian economic history. The creditors of the two most important real estate companies, Signa Prime and Development, will discuss the restructuring plans presented at the Vienna Commercial Court on Monday afternoon. If there is no majority for the proposed trust solution and a sale of the luxury real estate over several years, bankruptcy will result and thus a break-up.
Signa Prime includes the most important properties, including the luxury hotel Park Hyatt in Vienna, the Selfridges in London, the KaDeWe in Berlin, the Alsterhaus in Hamburg, the Oberpollinger in Munich and the stopped Elbtower in Hamburg. Creditors have registered claims of around 10.8 billion euros against Signa Prime, although according to the restructuring report, only just under 3.1 billion euros have been recognized so far. The other real estate company, Development, has around 2.3 billion euros in claims registered, of which 1.3 billion euros have been recognized so far.
The head of the Austrian financial administration justifies the rejection of the restructuring plans by saying that the liquidity necessary for a slow sale is not available. “The company can only stay afloat in the next few weeks by selling real estate,” said Peschorn. The lawyer also once again criticized the lack of transparency in the Signa companies. In his opinion, bankruptcy would “definitely” bring more clarity.
When the creditors vote at the Vienna Commercial Court, there must be a majority in terms of heads and the amount of the claim. Peschorn did not want to speculate on how other creditors would vote. “We are not guided by the majority, but rather by what is in the interests of the Republic and the taxpayers.” It is possible that there will be a criminal investigation.