The situation of the insolvent Signa Holding has deteriorated rapidly in the last few months. This is what the documents recently submitted by the opaque conglomerate indicate.
The detailed economic situation of the insolvent Signa Holding remains unclear. However, the documents submitted in last week’s bankruptcy filing allow initial conclusions to be drawn. According to data available to the Financial Times (“FT”), the conglomerate’s problems have rapidly worsened in recent months.
At the end of 2022, the holding company still had a debt of just under two billion euros, according to the “FT”. Just nine months later, the debt burden had skyrocketed to around five billion euros. That suggests huge liquidity problems as the group intensified its efforts to stave off economic collapse.
The data also suggests that a key reason for the imbalance was the high balance sheet valuation of the investments. At the beginning of the year, Signa Holding valued the shares in its subsidiaries at 5.2 billion euros, writes the “FT”. For the end of September, the holding company reported this value as just 2.8 billion euros. In the event of a compulsory liquidation of the investments, she put their value at only 314 million euros.
Business pressure from two sides
This rapid decline can be partly explained by the fact that René Benko and his company network had relied on two pillars that are having a particularly difficult time in the current economic downturn.
One is the construction industry, whose business is particularly affected by the recent sharp rise in interest rates and material costs. The other is retail, which is suffering from a pronounced weakness in demand due to high inflation.
More transparency through Creditors’ committee?
As part of the insolvency proceedings, Signa management has 90 days to draw up a restructuring plan for the creditors. They see most of the questions still unanswered for the conglomerate, which consists of over 1,000 companies. A major complex is the mutual credit links between individual subsidiaries.
In order to shed more light on the matter, the two Austrian creditor protectors AKV and KSV have called for the establishment of a creditors’ committee. This should support and control the insolvency administrator and generally ensure more transparency, they explained to the ORF.