In a significant development, Austria’s prominent real-estate entity, Signa, has announced its decision to file for bankruptcy, mirroring the recent insolvency move by its German subsidiary. The holding company disclosed its intention to initiate reorganization proceedings with self-administration at the Vienna Commercial Court on Thursday (November 30).
The company stated, “Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be sufficiently secured, so Signa Holding GmbH is applying for restructuring proceedings with self-administration.”
Roots of the Crisis: Russia’s War in Ukraine and Economic Fallout
Signa, once a robust player in the property and retail sector, has been grappling with a prolonged crisis, initiated by the onset of Russia’s war in Ukraine. The conflict has sent shockwaves through the European property market, impacting Signa’s extensive portfolio across Germany and Austria. Increased construction and energy costs, coupled with elevated interest rates, have compounded the company’s financial woes.
The real-estate giant owns a diverse range of commercial properties, including the iconic Chrysler Building in New York. In Germany, it oversees the struggling department store group Galeria Karstadt Kaufhof and faces setbacks in multiple incomplete development projects within major cities.
Notably, construction on the Elbtower in Hamburg, a 245-meter high project, has ground to a halt due to the company’s financial instability. Despite this, retail chain Galeria expressed confidence that it would not be adversely affected by the insolvency proceedings, according to an anonymous insider quoted by Reuters.
Leadership Shake-up and Financial Snapshot
In a bid to navigate through the crisis, Signa’s owner and entrepreneur, Rene Benko, announced his resignation as chairman of the Signa Advisory board in November, succumbing to shareholder pressure. Benko, who founded the company in 2000, transformed it into a significant real-estate and media conglomerate.
Signa, with offices in Austria, Germany, Italy, Luxembourg, and Switzerland, currently holds assets worth €27 billion ($29.6 billion) and has projects valued at €25 billion in development. However, financial giant JP Morgan estimates the company’s liabilities at around €13 billion.
As Signa faces this pivotal moment, the business landscape watches closely to see how the real-estate giant navigates the challenges ahead and whether it can emerge from the bankruptcy proceedings with a reinvigorated financial standing.
