OLG ruling confirmed

Bankruptcy instead of restructuring for Benko’s Signa Prime

(Bild: Sepp Pail, APA/Roland Schlager, Krone KREATIV)

One of the most important Signa companies, Signa Prime Selection AG, will now be sent into bankruptcy after all. The Supreme Court confirmed the Vienna Higher Regional Court's rejection of the restructuring plan accepted by the creditors - and thus upheld the Republic of Austria's claim!

Signa Prime Selection AG, one of the core companies in the convoluted Signa conglomerate, has been officially insolvent since the end of 2023. In spring 2024, the creditors agreed to a trustee restructuring plan, but the Vienna Higher Regional Court did not confirm this plan. 

Top properties bundled together
The financially ailing company appealed against the Higher Regional Court's decision, but the Supreme Court confirmed the rejection. It is therefore clear that there will be no restructuring under self-administration; instead, Signa Prime Selection AG, in which the top properties in city center locations were bundled, will be sent into bankruptcy and liquidated by a liquidator. One of the reasons given by the court was that it was "obviously not possible" to fulfill the trust plan.

In addition to the ruined Lamarr department store on Vienna's Mariahilfer Strasse, Signa Prime Selection AG also owns the Tyrol department store in Innsbruck and the Elbtower in Hamburg. The properties are now part of the bankruptcy estate.

Ruins of the Lamarr department store on Vienna's Mariahilfer Strasse

(Bild: Jöchl Martin)

"We accept the decision, our goal remains to implement the activities to create assets for the creditors," said Herwig Teufelsdorfer, CEO of Signa Prime, when asked. 

Gerhard Weinhofer, Managing Director of Creditreform, was more critical of the Supreme Court's decision: "With this decision, we run the risk of getting into a fire sale at an inopportune time, resulting in a lower quota for the creditors," said Weinhofer according to a press release. "The trustee restructuring would have had the advantage that we could have hoped for a recovery of the real estate market with falling interest rates at the same time. In this scenario, the chances of success - also in the opinion of the court experts - would have been higher and therefore more advantageous for the creditors."

Success for the "Lawyer of the Republic"
Wolfgang Peschorn, President of the Financial Procurator's Office and therefore the de facto "lawyer of the Republic" in the Signa case, had already stated shortly after the proceedings were opened that the restructuring under self-administration would not be approved for several reasons. 

Most recently, he again emphasized in "ZiB 2" that he was not convinced that restructuring proceedings under debtor-in-possession management were suitable to shed light on the events at Signa in view of their scope. "You shouldn't see this as one allotment next to another", said Peschorn, "but as a large house with 30 rooms, and you have to look inside them everywhere".

Remuneration of the insolvency administrator as a sticking point
In spring, the Vienna Higher Regional Court had already given a lot of thought to whether Signa Prime's restructuring plan would be feasible at all. Its verdict was unequivocal: a clear no.

As the highest instance, the Supreme Court has now singled out a single point, but has explained it in great detail: namely the remuneration of the insolvency administrator. This amounts to a good 23.5 million euros at Signa Prime.

The background: the law states that the costs of the restructuring administrator must be paid or guaranteed. In the Signa Prime case, however, the restructuring administrator deferred the impressive 23.5 million fee.

The Supreme Court now explains in the current decision, which is available to the "Krone": For this serious reason alone, the legal requirements for the confirmation of the restructuring plan are not met. This means that the court of first instance should have rejected it months ago, as Peschorn had always demanded.