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Signa founder René Benko

Photo: Antonio Bronic / REUTERS

The real estate and retail group Signa, owned by Austrian founder René Benkos, which is in dire financial straits, is running out of options. According to information from SPIEGEL and the magazine »News«, only the US hedge fund Elliott Investment Management, owned by activist investor Paul Singer, is still negotiating with Signa about the urgently needed cash injection. According to several insiders, Elliott has not been able to make an audit of the company's data in the short time available. "That's what they're doing now in the ongoing process," said one person with knowledge of the conversations. This is Benko's "last chance," according to those close to him.

Previously, other potential investors had bailed out: shareholders denied Benko further funds because he had not relinquished his voting rights and continued to be actively involved in the company. Signa was rebuffed by investors such as Mubadala Investment, Abu Dhabi's state-owned investment company, Saudi Arabia's sovereign wealth fund PIF and asset manager Attestor Capital.

How uncertain the situation is for Signa and thus Benko is also evident elsewhere: According to statements by the people involved, the restructuring specialist Arndt Geiwitz, who was hired at the insistence of the Signa shareholders, has not yet signed a contract for his role as chairman of the advisory board and shareholders' committee. The company already lists him as chairman of the advisory board on its website. Geiwitz, however, still has only one consulting contract.

From the outset, the restructuring expert, who had already worked for Schlecker and the Galeria insolvencies, had made it a condition that Signa was fully financed and had sufficient liquidity before signing a contract. As long as Signa was threatened with insolvency, Geiwitz did not want to sign.

In the same way, Ralf Schmitz, who was announced in mid-November as chief restructuring officer on the board of directors of Signa Prime and Signa Development, has not yet signed any contracts for this purpose and is working with a consulting mandate. The information about the actual roles of Geiwitz and Schmitz confirms previous media reports by »Lebensmittelzeitung« and »Bloomberg«. There was no comment from Signa on what happened.

Controversy over insolvency filing in the Supervisory Board

At the end of last week, the first company of the complex Signa construct out of well over a thousand companies had slipped into insolvency. Signa Real Estate Management Germany filed an official application for bankruptcy at the Charlottenburg District Court on Friday. It is a German subsidiary of Signa Prime Selection, where Benko has collected his valuable existing properties. The company, which has more than 100 employees, manages the development of Signa's German real estate projects. She is responsible for real estate development, asset management, leasing and research.

Behind the scenes, there is controversy about the insolvency of this company: Apparently, the supervisory board of Signa Prime, which had met on Friday, had been surprised by the application. The initiative of Timo Herzberg, head of SIgna Prime and Signa Development, was viewed very critically in the circle of supervisors. It was hoped that the companies would have more time. Herzberg, however, may have felt compelled to act, as he could otherwise have been accused of delaying insolvency as the responsible manager.

Time is running out to save his group of companies for Benko. By the end of December, Signa Holding alone, under which the Prime and Development real estate divisions are located, will need around 500 million euros, it is said. In just a few days, however, the liquidity of the holding company could no longer be sufficient to avoid insolvency. In addition, further holes would open up in the daughters. The insolvency filings for Holding, Prime and Development have already been prepared.