Court Rejects Signa’s Restructuring Plan in Historic Collapse

Court Rejects Signa’s Restructuring Plan in Historic Collapse

APA/dpa/Daniel Bockwoldt

 

The Vienna Higher Regional Court has upheld an appeal by the Republic of Austria, rejecting the restructuring plan of the collapsed developer Signa in what has become Austria’s largest-ever bankruptcy.

In a decision announced late on Friday, the court – the Oberlandesgericht Wien (OLG) – ruled against the proposed trust-based restructuring of Signa Development Selection AG, a central subsidiary within the Signa corporate conglomerate owned by Austrian billionaire René Benko.

The Signa conglomerate also includes the luxury property company Signa Prime.

Both subsidiaries declared bankruptcy at the end of last year, putting a stop to several high-profile development projects, including the luxury department store Lamarr on Vienna’s main shopping street, Mariahilferstrasse.

“We remain convinced that the trust-based solution is the best option for the creditors. Through the initial sales within Signa Development Selection and the early mass loan, a very good starting point had been created for fulfilment,” said Signa bankruptcy administrator Andrea Fruhstorfer.

Signa Development still has the option to challenge the OLG’s decision before the Supreme Court within the next two weeks.

Trust-based restructuring is a mechanism used during bankruptcy proceedings to manage and reorganise a bankrupt company’s assets and liabilities. In this process, the company’s assets are transferred to a third party, or trust, which oversees the sale of assets, often at a slower pace than in a standard bankruptcy liquidation.

In March, creditors of both Signa Development and Signa Prime overwhelmingly approved the restructuring plan, including the trust-based solution.

The OLG has already overturned the restructuring plan of Signa Prime, stating that the trust solution was “clearly not possible.”

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