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Luxury department store KaDeWe in Berlin: renovation plan confirmed

Photo: Birgit Kremser/dpa

The majority of the creditors of the insolvent Signa Prime Selection voted in favor of the restructuring plan presented, thereby averting bankruptcy and an emergency sale of the luxury properties.

Now a trustee should take over the helm and sell all assets, the restructuring administrator Norbert Abel announced on Monday after the creditors' meeting.

“In the vote, both the head and the capital majority were achieved and the trust restructuring plan was therefore accepted by the creditors,” it says in the statement.

The previous self-administered restructuring, which was massively criticized by some creditors, has now come to an end.

In a report by the restructuring administrator, creditors were recently given the prospect of a quota of 32 percent.

In the event of bankruptcy, however, the properties would have had to be sold as quickly as possible, which, according to the restructuring administrator, would mean a lower quota for the creditors.

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.

The heavily indebted real estate giant Signa was suffering from rapidly rising interest rates and the resulting fall in valuations, which led to an increased need for liquidity.

Signa Prime was considered the flagship of the real estate and trading group set up by Tyrolean entrepreneur René Benko.

It is the owner of important properties, including the KaDeWe in Berlin, the Alsterhaus in Hamburg, the Oberpollinger in Munich, the luxury hotel Park Hyatt and the luxury shopping mile Goldenes Quartier in Vienna.

With the result of the vote, the break-up that had been in the air that morning has been averted.

Wolfgang Peschorn, President of the Austrian Financial Procuratorate and thus lawyer for the Republic of Austria, announced to ORF radio that he would not agree to the restructuring plan.

No consent from the Republic of Austria

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.

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.

That won't happen for now.

The creditors' meeting in Vienna was only about the winding up of Signa real estate, not about the sale of department store businesses such as KaDeWe and Galeria Karstadt Kaufhof.

However, these retailers, which also belong to the Signa Group, are also insolvent and are looking for buyers.

mamk/Reuters