With self-government – Signa Development has filed for bankruptcy

Like Prime and its parent company Signa Holding, which filed for bankruptcy at the end of November, Signa Development is pursuing a self-managed restructuring process. According to AKV information, the development obligations amount to approximately 1.3 billion euros. Signa Development specializes in real estate development projects in German-speaking countries and Northern Italy.

“Buy – Develop – Sell”
The current balance sheet total of Signa Development is stated on the website as 4.6 billion euros. According to Creditform, the “gross asset value”, i.e. the sum of the property values, was approximately 2.8 billion euros as of December 31, 2022. According to its own statements, the company follows a ‘Buy-Develop-Sell’ strategy. The focus is on real estate development projects in good locations, away from premium locations in the city center, so as not to compete with the – now bankrupt – sister company Signa Prime.

According to the company, the projects include “The Icon”, “Bel & Main”, the Parkapartments am Belvedere and Hotel Andaz – all four close to Vienna’s main station. The Griesdorp in Bolzano and the brake factory in Berlin are also among the development projects. Now came the bankruptcy, in which the continuation had to be successful through restructuring.

Already at “junk level” since November.
The current bankruptcy was already clear in advance. On December 8, Luxembourg subsidiary Signa Development Finance announced that it, Signa Development and other companies in the group would likely file for bankruptcy “in the very near future.” For explanation, reference was made to Signa Development’s liquidity situation. At the end of November, rating agency Fitch had already downgraded Signa Development’s credit rating to ‘junk level’.

Nested ownership structure
The ownership structure is very complex. Nineteen shareholders, including fourteen companies with different owners, foundations – in which the Benko Family Private Foundation plays an important role – and investors hold shares in Signa Development. Co-shareholder Signa Holding owns more than eight percent and will be restructured as part of the insolvency proceedings that have already been opened. According to Wirtschafts-Compass, the calculated ultimate beneficiaries are ultimately Ingeborg Benko, René Benko, TPA auditor and tax advisor Karin Fuhrmann and Marcus Mühlberger. The latter, together with Christoph Stadlhuber, is director of Signa Holding, which went bankrupt at the end of November.

Renovator Erhard Grossnigg recently became board spokesperson. His predecessor, Timo Herzberg, had been dismissed as CEO with immediate effect due to questionable transactions, which he had also had at the very important Signa real estate company Signa Prime Selection AG. According to Wirtschafts-Compass, the chairman of the supervisory board is ex-chancellor and ex-SPÖ leader Alfred Gusenbauer. His deputy is ex-RBI boss Karl Sevelda.

Deep red numbers since 2022
Media reports show that the Signa Group has invested a lot of energy in recent years in avoiding an obligation to consolidate the entire group. The company deliberately designed corporate law within the group in such a way that there was no legal obligation to consolidate; the support came from law firm TPA, according to documents that ‘News’ recently published.

In 2022, Signa Development’s figures were already deeply in the red; the result from ordinary activities (EGT) was negative at more than 380.8 million euros. According to Wirtschafts-Compass, the number of employees in the development group was 55, compared to 112 in 2021.