The insolvent Signa Group has fired the previous real estate boss – due to strong suspicion of “gross breaches of duties”. The company’s previous top manager denies the allegations.
The ailing real estate and trading group Signa has fired the most important operational manager of company founder René Benko. In extraordinary supervisory board meetings of Signa Prime Selection AG and Signa Development Selection AG, their boss Timo Herzberg was relieved of his functions with immediate effect and terminated without notice and without notice, the Signa Group, founded by René Benko, announced yesterday evening.
There is an “urgent suspicion of gross violations of duties as a board member,” it said. “Unfortunately, we had to make this decision and take this tough step. The suspicion was clear and left the supervisory boards no other choice,” said the chairman of the supervisory boards of the two companies, the former Austrian Chancellor Alfred Gusenbauer.
Erhard Grossnigg will take over the role of board spokesman in both real estate companies, which are to be renovated and restructured. Gusenbauer praised Grossnigg as an “outstanding expert and specialist in questions of renovation.”
“Allegations are baseless”
According to a report in the “Frankfurter Allgemeine Zeitung”, the allegations against the previous Signa top manager Herzberg are said to involve, among other things, a company that he majority owns: Havit, a fitness club operator and provider of conference rooms. According to the allegations, a rent significantly below the market value was agreed for rooms in a Berlin office complex, which until recently was half owned by Signa.
Herzberg himself denies any wrongdoing. “The allegations in the room are baseless and are firmly rejected by Mr. Herzberg,” the “Handelsblatt” quoted his lawyer as saying. “In view of the ongoing proceedings, we cannot make any further comments at this time.”
Real estate projects in many German cities
Austrian entrepreneur René Benko’s Signa Holding filed for bankruptcy at the end of November. High construction costs, rising loan interest rates and home-made problems had left the trading and real estate group in trouble.
The most important properties and construction projects in the Signa portfolio belong to Signa Prime – including the currently standstill Elbtower construction project in Hamburg, the KaDeWe in Berlin and department store properties from the Galeria Karstadt Kaufhof chain. Signa Prime posted a loss of around one billion euros last year and had around 10.8 billion euros in debt at the end of 2022. The subsidiary Signa Development, which bundles other real estate projects such as office buildings and retail spaces, posted a loss of 316 million euros.
German insurers co-financed Signa
The bankruptcy of the Austrian group apparently also threatens to put a strain on the balance sheets of German insurers. As the “Financial Times” reports today, several German insurers, such as Allianz, Dortmund’s Signal Iduna and Munich Re, have invested a total of more than three billion euros in Benko’s real estate empire. In total, Signa borrowed money from around half a dozen German insurers
The newspaper also reports that around a third of this commitment is not covered by collateral. “This will be extremely painful for some insurers,” the FT quoted a person familiar with the matter as saying.
Another subsidiary insolvent
Several Signa companies – apart from the holding company – have already filed for bankruptcy, and further bankruptcies are expected. The rating agency Fitch has now downgraded the company’s credit rating to “C” from “CCC-” due to a possible bankruptcy filing by Signa Development. The agency announced this today. In the eyes of the rating agency, the company is now on the verge of defaulting on payments.
Signa Development Finance had only stated on Friday that it was likely that it, Signa Development and other companies in the Signa Development Group would file for insolvency proceedings “in the very near future”.
Meanwhile, another company in the Signa empire had to file for bankruptcy today. The creditor protection association KSV 1870 announced today that restructuring proceedings without self-administration had been opened at the Vienna Commercial Court over the assets of Signa Informationstechnologie GmbH. The company is the IT service provider for the Signa real estate group. The company should be continued.