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Signa Holding is in negotiations to sell half of New York’s Chrysler Building to urgently raise cash, the collapsed European property company’s administrator has said, as he warned of a protracted and financially painful wind-down ahead.
Creditors of the Austrian company, founded by swashbuckling young developer Rene Benko, met in Vienna on Tuesday to hear administrator Christof Stapf give his first assessment of its finances since insolvency proceedings began last month.
Stapf told them he and other outside advisers were still struggling to understand — or gain control over — Signa Holding’s sprawling network of subsidiaries and assets.
The holding company urgently needs cash to pay for its own wind-down, Stapf stressed, but has relatively little that it can immediately put on the market.
“The sale of Signa Holding’s Cessna Citation XLS private jet is under way . . . [and] discussions are also being held regarding the investment in Signa RFR US Selection AG, whose US real estate projects include the Chrysler Building in New York,” he said in a statement.
Signa Holding owes just over €5bn to creditors. So far €1.1bn of claims have been filed ahead of a mid-January deadline.
Analysts at JPMorgan estimated the broader Signa Group, which Signa Holding sits at the centre of, owes €13bn.
That figure is based on limited publicly available data, however, and restructuring advisers working with Signa say the true figure may be much higher.
“The issue is we do not know really at all about the scale of the borrowing. And even though we are relatively early in this process, that’s not normal. None of this is very normal at all,” said a lawyer working with one Signa creditor.
Stapf’s task is greatly complicated by the way Signa’s founder Benko, 46, set up his property empire.
Although he exerted almost complete control, and was its biggest shareholder, he has held no formal managerial role since 2013 and ensured accounts across its dozens of subsidiaries and their sub-entities were never consolidated.
“The holding company alone has 53 direct investments in companies and indirect investments in several hundred other companies,” Stapf said.
He asked for creditors and shareholders from across the group to unite under a single “group-wide steering committee” as the only viable way to fairly unwind its operations.
“The preliminary organisational chart of the group as of September 30 comprises a total of 46 pages in A3 format,” he added, pointing out that hardly anyone within the company seemed to know how it was run.
Of the 42 employees of Signa Holding, 34 worked in hospitality functions, including a huntsman and staff for Benko’s private jet.
Stapf laid them off in early December.
“There is a lack of management capacity with overarching knowledge . . . the holding company has recently only partially fulfilled its control function,” Stapf told creditors.
Faced with a crippling debt burden, and troubled by Benko’s apparent sangfroid in the face of mounting problems, Signa’s minority shareholders — which include some of the wealthiest families in Europe — rebelled against the businessman shortly before the company went into administration.
They are still in control of two of its most important subsidiaries, Signa Prime and Signa Development, which own many of the group’s prize assets — a portfolio of luxury properties across Europe including many of its swankiest department stores.
The supervisory board of the two companies fired their joint chief executive, Timo Herzberg — a Benko ally — earlier this month over what they alleged were “gross violations” of his fiduciary duties.
Many of those owed money by Signa are now carefully scrutinising the way Benko ran the businesses, raising questions about excessive expenses charged to obscure entities and complex intra-company loans that shuffled billions of euros around the group in the months before its collapse.
Benko, who was convicted of bribery in 2013, is currently a high-profile suspect in a probe into corruption and abuse of office in Austria.