Signa Group's Struggles Continue: Another Subsidiary Files for Insolvency
In the ongoing saga of financial turmoil for Austrian billionaire René Benko's Signa Group, another subsidiary has hit rock bottom. As reported on Monday by online insolvency announcement platform, Signa Real Estate Management Germany GmbH, responsible for developing and managing real estate for the Signa Group in Germany, has filed for insolvency. Consequently, Berlin lawyer Torsten Martini has been appointed as the insolvency administrator. Various media outlets had previously confirmed the application for insolvency, which was submitted to the Berlin-Charlottenburg district court. Signa Holding in Vienna, founded by René Benko, has yet to respond to repeated inquiries from DPA.
The insolvency of Signa Real Estate Management Germany adds another crack to Benko's intricate business construct, which already includes Galeria Karstadt Kaufhof, a German department store group, which has undergone restructuring twice, and the Elbtower in Hamburg, which has encountered a construction freeze.
Hamburg's Elbtower Construction Site Might See Fresh Breath of Life
There might be a glimmer of hope for the Elbtower skyscraper's construction site in Hamburg's Hafencity, which is currently in a standstill. Logistics billionaire Klaus-Michael Kühne is considering involvement in the project, as revealed by Kühne Holding AG's spokesperson in response to an inquiry from DPA. However, there are no ongoing talks with the city of Hamburg as of now.
Signa's Sports Retail Division in Trouble
Signa's sports retail division faced insolvency at the end of October. In response, Benko stepped down as the Chairman of Signa Holding under pressure from fellow shareholders, remaining as the majority shareholder through his family foundation. German restructurer Arndt Geiwitz was brought on board, providing extensive management expertise. It remains uncertain whether Geiwitz will succeed in presenting significant restructuring steps by the end of November, as promised, or if Signa will secure fresh funding from co-owners or other investors in time.
Low-Interest Rates and Geopolitical Crises Affect Signa Group's Growth
The Signa Group had been thriving during times of low-interest rates. However, the war in Ukraine led to increased construction and energy costs as well as higher interest rates, resulting in a 1.17 billion euro write-down at Signa Prime Selection in the previous year. The write-off mostly affected properties in Germany, according to the consolidated financial statements of the luxury real estate holding company.
Benko and Signa Group's Highlights and Controversies
Signa's financial crisis has brought up 46-year-old Benko back into focus. Benko, a former attic converter in his hometown of Innsbruck, successfully transformed into a real estate magnate by acquiring prestigious buildings such as the Chrysler Building in New York and the luxury Bauer Hotel in Venice, thereby earning his spot among the richest Austrians. However, his net worth has reportedly decreased significantly since November 2023.
Benko's business model faced criticism from trade unions and politicians, including the Left Party leader Martin Schirdewan. They accused Benko of simply being interested in Galeria Karstadt Kaufhof for its real estate assets, with similar questions arising during the sale of the Austrian furniture chain Kika/Leiner last summer. Both Signa's affairs and Benko's political ties will become subjects of investigation by two parliamentary committees of inquiry in Austria in the coming months.
Enrichment Data Integration:
Signa Group's mounting woes are not limited to the recent setbacks, as various subsidiaries are also grappling with financial difficulties and potential asset sales. Signa Holding GmbH announced insolvency proceedings at the end of November 2023 and is applying for self-administration restructuring proceedings at the Commercial Court of Vienna. Subsidiaries like Signa Prime Selection GmbH are in receivership due to a liquidity crisis and an extraordinary debt charge of 10.3 billion euros. Other subsidiaries, such as Signa Sport United in the USA and Kaufhof in Germany and Austria, are also facing financial challenges.
The company is undergoing a significant restructuring process, including the sale of major assets like the Chrysler Building in New York and the KaDeWe property in Berlin. Subsidiaries like Galeria Karstadt Kaufhof are being purchased by a consortium of investors, and Central Group has acquired the KaDeWe property and agreed to buy the rest of the KaDeWe Group.
René Benko himself is under investigation for possible fraudulent bankruptcy and money laundering by public prosecutors in Austria, Germany, and Italy. He was arrested in January 2025 on suspicion of falsifying an invoice and trying to hide assets from creditors. These challenges highlight the severe financial strain on Signa Group and its subsidiaries, leading to a complex and multifaceted crisis involving asset sales, legal investigations, and significant financial losses. Significant job losses and operational disruptions are also taking their toll on the company's employees and operations.
Sources: | Enrichment Data from Various Sources
