Signa unit says expects to file for insolvency in the very near term

DUESSELDORF (Reuters) -Signa Development Finance, a unit of Signa Development Selection AG, said on Friday it is “predominantly likely” that its parent and companies related to it will start insolvency proceedings soon.

Signa Development Selection AG, which invests in development projects in major urban centres, and further companies of the Signa Development group will apply for the opening of insolvency proceedings in the “very near term”.

Signa Development Selection AG had appointed restructuring expert Erhard Grossnigg to join its board last week.

Earlier on Friday, a person with knowledge of the matter had told Reuters that more companies of European property and retail giant Signa are expected to file for insolvency in the near future.

The moves would be a further turn for the worse for the company that has become the biggest casualty so far of Europe’s property crash.

Several Signa companies have filed for insolvency in the days since the Signa group holding company filed its own separate insolvency application last week, and more will come, said the person speaking on condition of anonymity.

Last week’s insolvency filing by the Vienna-based holding company – with debts of around 5 billion euros ($5.4 billion) – was a dramatic stumble in the conglomerate’s two-decade history that underscored dimming prospects for the broader property sector.

Signa Prime, an important division with holdings that include the Park Hyatt hotel in Vienna and the Elbtower skyscraper in Hamburg, is preparing an application for self-administrated insolvency, the Spiegel news magazine reported on Friday, citing unidentified sources.

An insolvency application is expected within the next two weeks, according to the report.

A Signa spokesperson didn’t immediately respond to a request for comment.

($1 = 0.9274 euro)

(Reporting by Matthias Inverardi and Rachel More; Writing by Tom Sims; Additional reporting by Juby Babu in Bengaluru; Editing by Sabine Wollrab, Mark Potter and Jonathan Oatis)