Benko's house of cards

Signa Prime: stage victory for the Republic’s lawyer

Wants Benko's construct to be scrutinized: Head of the Finanzprokuratur Wolfgang Peschorn

(Bild: Gerhard Bartel, APA/HELMUT FOHRINGER, AFP, Krone KREATIV)

In the Benko/Signa case, Wolfgang Peschorn, President of the Financial Procurator's Office, has achieved an important success.

In mid-May, the Republic's lawyer had lodged an appeal against the restructuring plan and the trustee solution at the most important group company, Signa Prime. The Vienna Higher Regional Court has now ruled that the restructuring plan will not be confirmed.

Signa's restructuring plan off the table for the time being
A brief history: In March, the majority of Signa Prime's creditors approved the restructuring plan. Peschorn, as representative of the Republic of Austria and therefore the taxpayers, already opposed it at the time. However, the Vienna Commercial Court confirmed the restructuring plan in the first instance.

However, following the appeal against this court decision in mid-May, the Vienna Higher Regional Court as the second instance overturned this confirmation. This means that Signa Prime's restructuring plan will not be approved by the court. In the final instance, the Supreme Court would now have its say.

More light into the darkness
Since the collapse of the Benko Group, Peschorn has vehemently argued that the non-transparent Signa construct should be broken up and that every last dark corner of the proceedings should be investigated before bankruptcy proceedings are opened. This would be provided for by law in the event of a break-up and would be the consequence of today's decision by the Vienna Higher Regional Court.

Fees in the millions tied to court confirmation
Today's decision by the Vienna Higher Regional Court would not only have drastic consequences for Benko and his managers if it is confirmed by the Supreme Court: The restructuring administrator's fee in the rumored amount of 22 million euros is tied to court confirmation. This is up in the air following the latest developments. 

Higher RegionalCourt criticizes the EUR 27 million loan 
Some passages from the reasoning of the Vienna Higher Regional Court are also less than flattering for the entire restructuring plan of Signa Prime: According to them, its fulfillment was obviously impossible. One reason for this is that the top properties planned for sale belong to subsidiaries from the Benko Group jungle, which are themselves insolvent. Added to this is the fact that the financially ailing Signa Prime did not even have enough funds to pay the restructuring administrator and the legal costs, but had to take out a loan of no less than 27 million euros. The bottom line is that the Vienna Higher Regional Court fires a broadside against Signa Prime and the restructuring administrator: the assumptions in the restructuring concept are literally described as "misguided".

On Monday, the liquidator merely stated: "Until the present decision of the Higher Regional Court of Vienna becomes legally binding, the proceedings will continue to be conducted as restructuring proceedings with self-administration."