Signa Prime Selection AG, a division of Rene Benko’s troubled Signa property empire, has filed for insolvency. This news follows the collapse of the main holding company which happened last month. The bankruptcy filing notice and restructuring plan was submitted to a Vienna court on Thursday, Dec. 28.

Signa, which acquired Selfridges in a 50/50 deal with Central Group two years ago, now holds a minority share in the U.K.-based department store group. The company faced financial challenges this year due to rising interest rates, falling property prices, and a slowdown in consumer consumption. Unable to secure the necessary liquidity for restructuring, Signa was compelled to declare insolvency and engage with the courts.

Erhard F. Grossnigg, a spokesman for the board of Signa Prime Selection AG, emphasised the need to find long-term solutions, stating, “The quality of the Signa Prime portfolio is excellent, and the development prospects of the projects, located in prime German-speaking city locations, are very promising.” Signa Holding is currently being managed by German restructuring specialists Arndt Geiwitz.

Central Group promptly expressed its support for the department stores co-owned with Signa and subsequently took over majority ownership of Selfridges. They also confirmed converting a loan into equity, becoming Selfridges’ majority shareholder and controlling the joint venture overseeing Selfridges Group.

Signa aims to reorganise its responsibilities and liabilities while preserving the value of its investments. The company stated that its Development Selection arm is also insolvent. Plans to submit a similar application for restructuring proceedings are currently underway, and there has been no news on that yet. The goal is to maintain Signa Prime Selection’s operations under a restructuring plan, mirroring the approach taken by the main holding company in November.

This development is indicative of broader economic challenges and financial difficulties faced by businesses in the UK. In 2023, rising interest rates, economic uncertainties in the UK, stricter antitrust measures, and geopolitical tensions led to a 33% decline in M&A activity. This was the lowest level the sector has seen in fourteen years. 

However, the year concluded with a more positive outlook as inflation decreased and interest rates stabilised. This improvement may provide CEOs and boards with increased confidence for strategic planning in 2024.

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