Wolfgang Peschorn, who represents the interests of the Republic of Austria as President of the Financial Procuratorate, has already made it clear: he will not agree to the restructuring plans.
The restructuring plans presented are about achieving higher proceeds by selling the properties as part of a trust model than in the event of bankruptcy. The liquidity necessary for a slow sale “is currently not in sight,” said Peschorn today (Monday) in the Ö1 “Morgenjournal”. Even if the restructuring plan were accepted, one would have to sell under pressure. “The company can only stay afloat in the next few weeks through sales.”
Bankruptcy instead of restructuring?
If the restructuring plans are rejected, bankruptcy proceedings are planned instead of the restructuring process under self-administration. In both scenarios, not much will be left of the companies in the long term; all properties and projects will be sold.
Peschorn once again criticized the lack of transparency of the Signa group of companies. Bankruptcy would “definitely” bring more clarity. He suspects that money could have been taken out of the companies and then reinvested in new projects. An investor could now appear “who now acts as a creditor with the money that was previously in the company.”
Peschorn believes criminal investigations are possible
Peschorn believes criminal investigations are possible. “And I also hope that the criminal authorities will begin targeted investigations here as soon as possible.” In this case too, bankruptcy proceedings would “undoubtedly be advantageous for the law enforcement authorities because a liquidator can work very well with them.”
The Signa series of bankruptcies is by far the largest insolvency in Austrian economic history. Creditors have filed claims against the insolvent luxury real estate company Signa Prime in a record amount of around 10.8 billion euros, of which only just under 3.1 billion euros have been recognized by the liquidator, according to the latest restructuring report. 2.3 billion euros in claims have been registered against Signa Development, of which 1.3 billion euros have been recognized so far. Signa Prime’s portfolio includes, for example, the Berlin luxury department store KaDeWe, the Selfridges in London and the Elbtower in Hamburg, which is currently at 100 of 245 meters construction height, and many other properties, such as the Goldenes Quartier and the Hotel Park Hyatt in Vienna as well as the Tyrol department store in Innsbruck. Signa Development develops real estate projects outside of the best locations in Austria and Germany as well as in South Tyrol.
At least 30 percent within two years
According to the restructuring plan proposals from Signa Prime and Signa Development, creditors should receive at least 30 percent of their recognized claims within two years and all usable assets should be handed over to a trustee for realization or satisfaction of creditors. From the perspective of the insolvency administrators, the trust restructuring plans offered lead to a significantly higher quota expectation than in the break-up scenario and they therefore recommend that creditors accept the trust restructuring plans.
The advantage of the trust restructuring is that the restructuring administrators would gain time to achieve higher prices when selling the projects and companies, explained the creditors’ representative Karl-Heinz Götze from the Credit Protection Association of 1870 (KSV1870) in the Ö1 “Morgenjournal”. In the event of bankruptcy, they would begin sales immediately.
In Peschorn’s opinion, however, it is “not at all certain that this 30 percent quota will exist if the restructuring plan is accepted.” The quota is merely a promise and could only possibly be achieved under very optimistic assumptions.
The plans require both a majority of creditors and a majority based on the amount of the claims. According to Götze, it is not possible to predict how the votes will turn out today.
