Unlock the Editor’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
The CEO of Signa Group’s two main subsidiaries has been fired for alleged “gross violations” of his duties at the crisis-hit European luxury real estate conglomerate.
Timo Herzberg, an appointee and ally of Signa founder René Benko, has had his contract terminated with immediate effect, the group said Monday evening.
“Unfortunately, we have had to make this decision and take this difficult step,” said Alfred Gusenbauer, chairman of the supervisory boards of Signa Prime and Signa Development. “The suspicion was clear and left the supervisory board no other choice. Especially in challenging times, 100 percent trust in the people involved and unity in decisions is required.”
The companies said in a joint statement that the reason for the dismissal “[was] a strong suspicion of gross neglect of duty as a board member.”
The two companies own the majority of Signa Group’s core real estate assets – a portfolio that includes part of Selfridges in London, half of the KaDeWe store in Berlin and the Chrysler Building in New York, as well as dozens of other high-profile pieces. of luxury real estate.
Both companies are expected to file for bankruptcy in the coming days, following the collapse of their parent company, Innsbruck-based Signa Holding, two weeks ago.
Herzberg could not immediately be reached for comment.
His ouster is the most public demonstration of an intensifying power struggle within Signa, as the sprawling, indebted real estate group begins to unravel, leaving creditors and shareholders of hundreds of companies battling to protect claims on assets.
Rising interest rates, falling property valuations and a lending freeze have hit the group, making it the most prominent victim of a downturn in the commercial property market.
Although Benko has not played an official role in the company’s management since 2013 – after being convicted of bribery in his native Austria – he has long exercised near-total control over the company through a complex network of holding companies, foundations and trusts.
Minority shareholders rioted in November to try to gain control of the company, ahead of what they saw as its impending financial collapse.
Benko has fought to maintain control, complicating an already potentially byzantine governance process.
Many creditors and minority shareholders of the privately controlled group have privately expressed major concerns in recent days about the way Benko — still its largest shareholder — was handling its financial affairs, according to multiple people familiar with their discussions, involving assets, cash and debts were shifted in the US. a way that leaves some unaware of which assets they have a claim on.
Herzberg – founder of the German real estate group Signature Capital Group – joined Signa in 2017.
Signa Prime and Signa Development said they have appointed restructuring expert Erhard Grossnigg to take over all of Herzberg’s executive functions.
“We need peace and order for these Signa companies, their partners, investors and employees,” said Gusenbauer – a former chancellor of Austria who was brought into Signa by Benko in 2010. “The quality of Signa’s Prime portfolio is excellent, and [Signa Development] projects, which are located in the top locations of German-speaking cities, are very good.”
