Top subsidiaries of ailing Signa Group file for bankruptcy

DPA
·2 min read
The logo of the real estate company Signa is displayed on the facade of a high-rise building at the company's Berlin headquarters. Signa Prime Selection AG, a key subsidiary of Austrian real estate and retail mogul Rene Benko's Signa Group has filed for debtor-in-possession reorganization proceedings with the Vienna Commercial Court, the company announced. Monika Skolimowska/dpa
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The company that owns the luxury KaDeWe department store in Berlin and the Elbtower in Hamburg filed for bankruptcy on Thursday.

Signa Prime Selection AG, a key subsidiary of Austrian real estate and retail mogul René Benko's Signa Group has filed for debtor-in-possession reorganization proceedings with the Vienna Commercial Court, the company announced.

On Friday, the Signa Development Selection AG will do the same, the firm said.

"The aim is the organized continuation of business operations within the framework of self-administration and the sustainable restructuring of the company," the company said in a press release.

Signa Prime also owns properties of the Galeria Karstadt Kaufhof department store chain. It builds and lets properties. Other companies are responsible for the retail business of the department stores.

According to the company website, Signa Prime owns properties worth a total of €20.4 billion ($22.7 billion). According to the annual report for 2022, Signa Prime had liabilities of almost €10.8 billion at the end of the previous year.

Signa Prime posted a loss of around €1 billion in the previous year after the value of its investment properties, particularly in Germany, was devalued by around the same amount. The company's four board members were nevertheless awarded bonuses totalling €19 million.

Signa Development specializes in urban development projects in the residential and commercial segment. The current balance sheet total is stated on its website as €4.6 billion.

"Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be secured to a sufficient extent," the press release stated.

After strong growth during the low-interest phase, the company network created by Benko is struggling with higher construction costs, energy prices and interest rates, as is the entire property sector. The bricks-and-mortar retail sector is also under economic pressure.

The online sporting goods division had already filed for insolvency in October. In recent weeks, Signa Holding and a number of smaller subsidiaries announced their insolvency.