Austrian Court Rejects Signa Prime Restructuring Plan as “Not Feasible”

Austrian Court Blocks Restructuring Plan for Signa Prime Selection AG

In a surprising turn of events, an Austrian court has halted the restructuring plan for Signa Prime Selection AG, dealing a blow to efforts to save Rene Benko’s flagship unit. The Vienna Higher Regional Court deemed the creditor-backed plan to sell property held by the company as “obviously not feasible,” overturning an earlier approval.

The plan, which had garnered support from creditors in March, aimed to pay them at least 30% of their claims to avoid liquidation. However, the court raised concerns about the lack of €100 million ($108 million) in debtor-in-possession funding needed to bring subsidiaries out of insolvencies and facilitate property sales.

Signa Prime’s insolvency, triggered by a cash crunch amid rising interest rates and falling property prices, has become the largest in Austria’s history. The company, once a powerhouse in the property and retail sector with assets like London’s Selfridges department store and the Hotel Bauer in Venice, now faces a complex legal battle involving multiple jurisdictions.

The court’s decision highlighted flaws in the restructuring plan, including overly optimistic market recovery assumptions and challenges in recovering funds from insolvent units. The ruling, which can be appealed, was initiated by Austria’s Finanzprokuratur, citing concerns about transparency and financial support in the process.

For now, Signa Prime will remain in self-administered insolvency, as confirmed by the company’s administrator. The outcome of the appeal and the future of the company hang in the balance, as stakeholders navigate the turbulent waters of one of Austria’s most high-profile insolvencies.

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