Benko’s empire is falling apart – Peschorn: ‘Bankruptcy of Signa cannot be ruled out’

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The Republic’s lawyer takes the Benko system seriously: Wolfgang Peschorn describes the business model as the “second sin against young people after the climate crisis.”

René Benko’s empire is crumbling. In fact, it is quickly falling into disrepair. Given the developments, the president of the financial procuratorate, Wolfgang Peschorn, feels vindicated. The Finanzprokuratur represents the interests of the Republic in Signa’s insolvency proceedings.

Signa wanted to buy her freedom
In the event of the bankruptcy of kika/Leiner, with the approval of the insolvency court and the creditor protection associations, the administrator agreed that Signa Holding could settle all claims against all Signa companies, bodies and consultants with a payment of 20 million euros.

The Attorney of the Republic was anything but satisfied with this agreement. He insisted that Signa pay the full amount immediately and not in four installments of five million each. It would have been better if the bankruptcy court and the creditors’ committee had followed the proposal of the lawyer for the Republic. Signa Holding only paid a tranche of five million euros.

Payments will likely still be missed
“These outstanding remaining 15 million euros are now an insolvency claim. This means that Kika/Leiner’s creditors receive a quota. How high that will be has yet to be decided,” says Peschorn. Kika/Leiner owed the state approximately 49 million euros in taxes that were legally deferred during the corona crisis. Unfortunately, due to the lack of payments from Signa Holding, the 80 percent loss will no longer be significantly reduced. The total debts amount to 150 million euros.

What will ultimately be paid on the outstanding 15 million euros “depends on what part will result from the bankruptcy of Signa Holding”. It is particularly regrettable that all companies, executive bodies and advisors of the Signa conglomerate have been released by this agreement from their obligations arising from the insolvency of Kika/Leiner. “This liability waiver remains valid,” Peschorn defines.

Peschorn is skeptical about the restructuring plan
It must be clear by February 12 at the latest whether the restructuring plan drawn up by Signa Holding Management is plausible. Peschorn doubts whether this short period will be sufficient for a careful assessment. “The suitability of the restructuring plan must be examined. To this end, the curator’s report must be able to provide the judge and creditors with information about whether a better rate than the proposed 30 percent is possible.”

Because not only the crowning achievement of the structure – Signa Prime (with 54 buildings and a value of 20 billion euros) went bankrupt on Thursday, and Signa Development a day later – the total lack of transparency is the biggest problem. There are approximately 1,000 subsidiaries. ‘There is a lack of overview. The question arises as to why management has tried not to present a consolidated balance sheet. This would have made connections visible that were apparently intended to remain hidden. Namely the claims and debts between the subsidiaries and the actual capital base of the conglomerate. Now you are faced with a real tangle of requirements,” Peschorn analyzes.

‘Bankruptcy cannot be ruled out’
Given the difficult-to-understand structure, “individual companies can still be exploited.” Does that ultimately mean bankruptcy? “You cannot rule that out now,” says Peschorn. “In order for creditors to agree to the restructuring plan, everything must be made transparent.”

“The goal was the highest possible profit”
One point that surprises all experts is that well-known investors and commissioners such as Alfred Gusenbauer never noticed or perhaps did not want to notice the unstable construction. What could be the reasons for this? “I always talk about advisor and interest networks. People never understood me before, but now they know what I mean. One person cannot build such a conglomerate. There are consultants who design these structures and the common interest of everyone involved in the big money. The goal was the highest possible profit for the so-called investors.”

‘Second sin against young people after climate catastrophe’
According to the financial expert, the business model was not sustainable: “It required constant new real estate transactions and the immediate upgrading of the purchased properties according to the so-called International Financial Reporting Standards. The profit, which was only visible on the balance sheet, was probably mainly used to fulfill the promises made to investors,” Peschorn explains. For the republic’s lawyer, business models like those of Benko and many other real estate jugglers around the world are a “second sin against youth after the climate catastrophe.”

How does the lawyer for the Republic arrive at this harsh judgment? This business model aims to ensure that “the profits that are thought to be possible in the future are already realized and paid out in the present,” Peschorn explains, explaining the pie-in-the-sky model. “It’s real-time travel.” The crux of the matter: the profits paid out must be earned afterwards – at Signa, for example, this will probably no longer be the case due to rising interest rates and higher construction costs.

Taxpayers poured money into it
German taxpayers sponsored Benko’s department store chain Galeria Karstadt Kaufhof with almost 700 million euros. In Austria, the legislature granted kika/Leiner approximately 49 million euros in tax deferrals during the corona crisis.

So the stupid man is the taxpayer again, while Benko remains a rich man and, apart from the malice, has no personal consequences to fear?

“Scandals could have been prevented”
For Peschorn it is clear that ‘responsibilities must be demanded’. often neglected in Austria.” of the Republic.

This is especially true for those who have the power to prevent such developments: financing banks, supervisory boards and accountants. Many people in charge of the banks have probably already forgotten the causes of the crisis in the financial markets. With due care and simple questions, “scandals such as Signa or Wirecard would have been discovered early,” says the president of the Financial Public Prosecutor’s Office.

Source: Krone

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