Another real estate company belonging to Austrian investor René Benko’s ailing Signa Group has filed for insolvency. According to the Vienna Commercial Court, a corresponding application was submitted today by Signa Development Selection AG.

The company, which specializes in project developments, is therefore aiming for self-administration restructuring proceedings, as announced by Signa on Thursday. The company should be continued and creditors should be offered a quota of 30 percent payable within two years, it said.

According to the Creditreform protection association, the claims of around 200 creditors amount to around 1.3 billion euros. This means that the claims against the insolvent Signa Group companies now total around twelve billion euros, said Creditreform spokesman Gerhard Weinhofer.

Signa Prime Selection AG also filed for insolvency

On Thursday, the group’s real estate flagship, Signa Prime Selection AG, also filed for insolvency. The requested self-administration proceedings have now been opened by the commercial court. Signa Prime includes commercial properties in top locations, including the Elbtower in Hamburg, the KaDeWe in Berlin and a luxury department store under construction in Vienna.

The highly complex Signa Group still has hundreds of smaller companies. “There is currently an insolvency cascade from top to bottom. The question is whether the cascade can be stopped so that the assets can begin to be realized in peace,” said Weinhofer. According to Creditreform, Signa Development’s real estate portfolio includes 39 projects.

Higher interest rates, higher construction costs and higher energy prices

After strong growth in the low interest rate phase, Benko’s empire got into extreme difficulties due to higher interest rates, higher construction costs and higher energy prices. Signa also owns the Galeria Karstadt Kaufhof (GKK) department store chain. What the announced bankruptcy filing means for GKK itself is still unclear.

According to Creditreform, Signa is the largest insolvency in Austria’s post-war history. Signa Holding GmbH, whose insolvency proceedings have been ongoing for around a month, is in first place with a debt total of five billion euros, according to the APA news agency. This is followed by Signa Prime Selection AG with claims from creditors amounting to around 4.5 billion euros.