This means that a trustee will take over at Signa Prime – he will sell all assets, including prestigious luxury properties, for a maximum of five years. Bankruptcy has therefore been averted for the time being.
The approved restructuring plan proposal stipulates that all properties will now be sold in an orderly manner by the previous restructuring manager Abel as trustee over a period of three to five years in order to benefit from an expected recovery on the market. This should cover at least 30 percent of the claims. In the event of bankruptcy, however, the properties would have had to be sold as quickly as possible, which, according to the restructuring administrator, would have resulted in a lower quota for the creditors. The restructuring plan still has to be confirmed by the Vienna Commercial Court. The deadline for this is the end of June.
“The vote was very clear”
“The vote was very clear. There was a large surplus of votes that approved,” said Karl-Heinz Götze from the Credit Protection Association 1870 (KSV1870) to journalists after the creditors’ meeting at the commercial court. A large majority was also achieved when it came to liabilities.
“Some creditors may have agreed to the restructuring plan with a little stomachache,” said Gerhard Weinhofer from the creditor protection association Creditreform. “Ultimately it is the most economically sensible solution.” The trust solution leaves more time for the best possible exploitation of the properties and for pursuing liability and avoidance claims. “It is clear that in the end Signa will only exist on paper.”
Largest bankruptcy in Austrian economic history
The Signa series of bankruptcies is by far the largest insolvency in Austrian economic history. To date, 475 creditors have registered claims totaling a record 12.8 billion euros against the insolvent luxury real estate company Signa Prime; around 5.9 billion euros have currently been recognized by the insolvency administrator. 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.
Signa Development – Redevelopment plan and trust solution accepted
The creditors of Signa Development – like those of Signa Prime before them – have approved the restructuring plan and the trust solution. The restructuring manager Andrea Fruhstorfer takes over all of the real estate developer’s assets as trustee and sells them within two to a maximum of five years. This is intended to prevent the assets from being liquidated quickly – at lower prices – as would be the case in the event of bankruptcy.
The restructuring plan provides for a restructuring trust with a super quota (up to 100 percent) to be added to the offered quota of 30 percent, as the Alpine Creditors Association (AKV Europe) announced. Whether the creditors receive the restructuring plan quota of 30 percent or more “depends primarily on the development of the real estate market in the next few years,” noted Karl-Heinz Götze from the Credit Protection Association of 1870 (KSV1870).
Creditreform and AKV Europa had already assumed that creditors could expect a higher quota. However, the Vienna Commercial Court still has to approve the restructuring plan and the trust solution. One condition for this is that, in addition to the general insolvency law requirements, the shareholders of Signa Development must be addressed with the restructuring plan in question at a general meeting, as KSV1870 announced in a press release. The requirements must be met by the end of June.
