(Bloomberg) -- Creditors of the two main property units in Rene Benko’s Signa conglomerate backed plans to sell off assets as part of a restructuring that’s expected to recoup about 30% of their money.

Lenders, which include banks, insurers and sovereign wealth funds, backed the proposals for Signa Prime Selection, the flagship luxury unit, and its smaller sister Signa Development Selection at meetings in Vienna on Monday.

Signa Prime owns famous properties such as the Selfridges department store in London and the KaDeWe in Berlin. Signa Development is a traditional commercial real estate developer.

Under the plans, assets will be handed over to trustees following approval in an Austrian court. For Signa Prime, creditors have registered combined claims of €12.8 billion ($13.9 billion), according to a statement from administrators. Of those, €5.9 billion have been accepted so far.

In a statement issued after the ballot, a group of Signa Development bondholders described their approval as a “vote against the alternative of an unorderly liquidation rather than an expression of our support.” They also called for the firm’s administrator to ensure transparency in asset sales as well as a full investigation into more than €600 million of cash outflows that took place before Signa’s collapse last year. 

The decision marks the latest chapter in the dramatic meltdown of Benko’s property empire, which at its peak included assets worth €23 billion. The complex, debt-laden business he built up over two decades collapsed under the pressure of higher interest rates, rising costs and falling valuations, in the largest insolvency in Austrian history.

The deals agreed Monday avoid a fire sale of assets that would have risked adding pressure on already shaky property valuations, according to bank regulators. Despite upheaval in the global property market, buyers have been lining up for the prospect of snapping up some of Europe’s most prominent buildings at a discount.

“At the end of the day there was a large surplus of votes that supported the plan,” said Karl-Heinz Goetze, the head of insolvency at the KSV1870 creditor association. “The next step will be to assess how the necessary financing can be ensured.”

The approval will be a relief for insolvency administrators at the two units, and board member Erhard Grossnigg, an Austrian restructuring specialist who was brought in by shareholders at the end of 2023 to come up with a turnaround plan.

Bonds of Signa Development, the group’s only publicly traded instrument, were quoted broadly unchanged on Monday afternoon at 15.7 cents on the euro, according to data compiled by Bloomberg.

Signa Unit Offers Creditors 30% of Their Money Back in Plan

The court has until June 30 to confirm that the conditions for the plan are in place. Signa Prime and Development shareholders will appoint new supervisory boards and management following a meeting on April 10.

The disposal process still faces obstacles, as co-ownership of some buildings, blocking claims by creditors, and a complex corporate set-up may make suitors cautious. 

Some creditors, including Austrian government representative Wolfgang Peschorn, had argued before that the restructuring plan lacked financing and a clear strategy, and that a liquidation process would have helped shed light on dealings.

Signa Prime also has many of its German assets — including Elbtower, the half-completed skyscraper in Hamburg — in provisional insolvency proceedings. To avoid those going into full insolvency, and being sold at potentially lower valuations, the division needs to pump in fresh funds to bring them out of creditor protection by mid-April. 

To that end, administrators for the luxury property unit have been in discussions with financiers to bring in additional funds. Kuehne Holding, a Signa Prime shareholder, and some banks are considering an emergency loan of more than €100 million, Bloomberg News reported earlier on Monday. 

Wider Impact

The saga also has a political dimension. The downfall of Benko — once among Austria’s richest billionaires before he filed for personal insolvency — and his ties to top politicians are shaping up to be a key topic in the country’s general elections scheduled for the fall.  

In the wake of the Signa collapse, Austrian officials are looking at ways to plug loopholes that allowed Benko to build an obscure corporate structure that took administrators and advisers months to untangle. Prosecutors in Vienna and Munich are probing several allegations, including fraud and money laundering. Benko’s lawyers have denied wrongdoing by their client.

--With assistance from Laura Malsch, Arno Schütze and Paula Doenecke.

(Updates with comments from Signa Development bondholders in fifth paragraph)

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