faq
Why did Signa have to file for bankruptcy now? What does this mean for the group’s construction sites and the real estate market? And what are the consequences for billionaire René Benko himself? Answers to central questions.
What does that mean? Filing for bankruptcy of Signa Holding?
This insolvency application by the billion-dollar and rather complex Signa Holding is initially an admission that apparently no one wanted to inject more money in order to make entrepreneur René Benko’s company liquid again in the short term: not a hedge fund, with which negotiations were apparently carried out until the very end, not that one Saudi Arabian sovereign wealth funds – and no one from the circle of millionaires or billionaires who are co-shareholders in Signa.
These include some well-known business giants, such as the logistics entrepreneur Klaus-Michael Kühne, Roland Berger, founder of the well-known management consultancy, the Austrian industrialist Hans Peter Haselsteiner, Fressnapf founder Torsten Toeller and the Peugeot family from France.
Why is bankruptcy coming now?
What happened today is an “emergency brake”. A 200 million euro bond would have fallen due tomorrow – money that Signa apparently doesn’t have liquid. According to estimates, the company is missing around half a billion euros for loans that are due by the end of the year – hence the application for insolvency at the commercial court in Vienna.
How does the procedure work?
It’s about a special, somewhat “milder” form of insolvency. Signa wants to restructure itself under self-administration according to its own plan – but under the supervision of a restructuring manager appointed by the court. The Vienna Commercial Court has now permitted this restructuring process under self-administration. According to Austrian law, creditors must receive at least a quota of 30 percent.
What’s next, including with the construction projects and Galeria?
Signa’s plan initially means a lot of work for the court-appointed administrator. Signa is complexly nested, the company empire must first be sorted: What values are really there? Which properties and which business areas are worth what?
Then a decision must be made: Where are there investors, what can be sold – and for how much? And what should Signa keep for a reboot? This also affects the employees of Galeria Karstadt Kaufhof. Their future remains unclear.
This is also the case with the prominent construction projects of the Signa Holding, the Elbtower in Hamburg, for example, or the Alte Akademie in Munich, in the middle of the pedestrian zone. Work there had already been stopped because the bills were obviously no longer being paid. Now, for each individual construction project – each of which is a separate company – the question is whether there are investors or financiers who are willing and able to take over and continue projects.
According to experts, the entire real estate market could be shaken if many top properties from Signa’s portfolio were now offered for sale. Especially since the prices for commercial real estate in particular are already under strong pressure.
How does politics react?
“Possible effects must now be examined,” said a spokeswoman for the Federal Ministry of Finance. Galeria Kaufhof Karstadt received state support in 2021 and 2022. The Economic Stabilization Fund (WSF) helped the company with a total of 680 million euros.
Munich has already stopped all planning for Signa projects. The city of Hamburg has so far kept a low profile about the consequences of the bankruptcy. Signa owns several expensive properties in city locations there. Not only the construction of the Elbtower, but also work on two other Signa construction sites was stopped. Meanwhile, there are the first voices in the SPD parliamentary group that are thinking loudly about a possible dismantling of the Elbtower – especially since it is unclear whether the project is even worthwhile.
Austria’s Chancellor Karl Nehammer reacted calmly to the country’s largest bankruptcy since the Second World War. Bankruptcies are “part of economic life”. It is also a purely economic matter. “I don’t see a political issue, this is a case of insolvency law,” said the ÖVP politician.
How hard is it hitting René Benko himself?
René Benko worked his way up from a humble background to become a self-made billionaire – and was called “Wunderwuzzi” in Austria, as an example of the Austrian economic miracle. His assets have already shrunk in the past few weeks. At the beginning of November, the US magazine Forbes estimated it at $5.6 billion. Benko now appears on the global “rich list” with a fortune of $2.8 billion.
It is difficult to say how much he will have left as a result of the bankruptcy – because his group of companies and the family foundation behind it are so complexly interwoven. His foundation also contains, among other things, an art collection including a Picasso that could be turned into money. Benko has promised his fellow shareholders that he will contribute money for the renovation himself – as a “confidence-building measure”. But it is questionable how much trust remains on the part of the lenders – which also makes it unclear whether Signa Holding can survive.
With material by Wolfgang Fichtl, ARD Studio Vienna