VIENNA (Reuters) -A unit of Austrian property group Signa that holds many of its most prized assets, Signa Prime Selection, is able to fund its operations during insolvency proceedings, its administrator said on Monday, but questions remained over a looming cash shortage.
Signa is the biggest casualty to date of Europe’s property crisis. Its holding group at the centre of a complex constellation of around 1,000 companies filed for insolvency in November. Two of its most important units, Signa Prime and Signa Development Selection, followed suit in December.
Built from nothing by 46-year-old entrepreneur Rene Benko on the back of super-low interest rates, Signa expanded rapidly, building and buying property developments and retail chains mainly in German-speaking cities but also as far as the United States, where it is joint owner of New York’s Chrysler Building.
“The ongoing funding of Signa Prime Selection’s operations is secured, according to the financial plan presented,” law firm Abel said in a statement during Signa Prime’s first creditors’ meeting, a step in the insolvency proceedings. Signa Development’s first creditors’ meeting was due later on Monday.
Signa Prime can continue to avail itself of the self-administered form of insolvency proceedings, the administrator overseeing the process informed creditors at the meeting, creditors’ associations which were present said. That requires the company’s assets to still be worth a certain amount.
The administrator, Abel, added in its statement that the company’s assets could be used to generate funds for operations if needed.
Creditors’ association KSV1870, however, said a looming cash shortfall had not been fully addressed.
“According to information available to KSV1870, between 300 million euros and 500 million euros ($329 million-$548 million) of extra liquidity is needed in the short- to medium-term,” it said in a statement, adding that discussions on bridge financing were ongoing.
Signa Prime did not immediately respond to an emailed request for comment.
($1 = 0.9128 euros)
(Reporting by Alexandra Schwarz-Goerlich and Francois Murphy, Editing by Louise Heavens and Sharon Singleton)
