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Signa-Juwel KaDeWe: Necessary liquidity for restructuring is missing

Photo: Birgit Kremser/dpa

As one of the creditors of the insolvent Signa companies of the Tyrolean investor René Benko, the Republic of Austria will not agree to the proposed restructuring plans.

Wolfgang Peschorn, President of the Austrian Financial Procuratorate and thus the Republic's lawyer, said this to ORF Radio.

The creditors of the two most important real estate companies, Signa Prime and Development, will vote on the restructuring plans presented at the Vienna Commercial Court on Monday afternoon.

If there is no majority for the proposed trust solution and a sale of the luxury real estate over several years, bankruptcy will result and thus a break-up.

Signa Prime includes the most important properties.

These include the luxury hotel Park Hyatt in Vienna, the Selfridges in London, the KaDeWe in Berlin, the Alsterhaus in Hamburg, the Oberpollinger in Munich and the stopped Elbtower in Hamburg.

The head of the financial administration justified his rejection by saying that the liquidity necessary for a slow sale was not available.

This is needed in order to be able to wait for a market recovery and to take time to sell.

“The company can only stay afloat in the next few weeks by selling real estate,” said Peschorn.

Emergency loan in prospect

In addition, it is not certain that the promised quota of 30 percent can be met if the restructuring plan is accepted.

“There’s no guarantee,” said Peschorn.

The lawyer also once again criticized the lack of transparency.

In his opinion, bankruptcy would “definitely” bring more clarity.

Money could have been taken out of the companies and then reinvested in new projects, said Peschorn.

Signa could possibly secure liquidity through an emergency loan.

According to Reuters, Hamburg billionaire Klaus-Michael Kühne would be available for this.

There are discussions about a loan worth millions, a person familiar with the situation told the news agency on Monday.

The Bloomberg agency had previously reported on such an emergency loan.

Kuehne and some banks could provide a total loan of more than 100 million euros, the Bloomberg report said, citing several people familiar with the matter.

The money would provide liquidity to cover bills and continue construction, the insiders said.

The Signa bankruptcy is the largest bankruptcy in Austrian economic history.

Creditors have registered claims of around 10.8 billion euros against Signa Prime, although according to the restructuring report, only just under 3.1 billion euros have been recognized so far.

Around 2.3 billion euros in claims have been registered with Development, of which 1.3 billion euros have been recognized so far.

When the creditors vote at the Vienna Commercial Court, there must be a majority in terms of heads and the amount of the claim.

Peschorn did not want to speculate on how other creditors would vote.

“We are not guided by the majority, but rather by what is in the interests of the republic and the taxpayers.”

It is possible that there will be a criminal investigation.

“And I also hope that the criminal authorities will begin targeted investigations here soon,” said Peschorn.

“In this case, too, bankruptcy proceedings would undoubtedly be advantageous for the law enforcement authorities, because a liquidator can work very well with them.”

mamk/mik/Reuters