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Fall of former Brown Thomas and Arnotts owner continues with self-administration move

Signa collapse leaves line of creditors and unfinished buildings in its wake

René Benko was Austria’s biggest export since 1980s Austrorap sensation Falco – until this week, when the music died.

In the last two decades, the 46-year-old Innsbrück native had left behind his working-class roots to become Austria’s favourite bling billionaire. He collected luxury homes, a triple-deck super yacht and stakes in landmarks from New York’s Chrysler building to Berlin’s KaDeWe department store and Selfridges in London, which part-owns Brown Thomas and Arnotts.

Now he has topped it all with the biggest bust in Austrian corporate history.

After withdrawing by degrees from Signa during the year, Mr Benko was squeezed out of his remaining roles earlier this month.

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And while Wednesday’s application for self-administration was no surprise, the Signa slow-motion car crash has caused tremors across continental Europe. In its wake: a trail of half-finished buildings and even more corporate question marks.

Back in 1999, Benko got his start in luxury attic renovations and then, a decade later, moved into department stores, often separating desirable properties from an often struggling business model.

Earlier this year, Signa announced holdings worth €27 billion, with projects with worth €25 billion under development.

Signa partner Central Group of Thailand was quick off the mark to take control of London’s Selfridges (and, with it, Brown Thomas and Arnotts), but things look less rosy for Signa’s core businesses in Austria and Germany.

Not only has Signa left half-finished buildings on landmark sites in Hamburg, Berlin and Munich: its luckless ownership of merged department store chains Kaufhof and Karstadt has seen dozens of closures and uncertainty about what remains.

On Thursday, the Signa insolvency chain reactions continued with the insolvency of its SportScheck high street sport retailer.

Until this month, René Benko showed a prodigious talent for shrugging off difficulties – and the law.

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A decade ago he received a 12-month suspended jail sentence after he paid a former Croatian prime minister €150,000 to intervene on his behalf with the Italian tax authorities. Benko was also called as a key witness at a corruption inquiry into the Coalition of former prime minister Sebastian Kurz.

Austria’s disgraced former political wunderkind, once a close friend, is now just another creditor in the queue, reportedly owed €1.65 million by Signa.

Among the group’s most exposed institutional creditors are Austrian banks Raiffeisen and Bank Austria, accounting for about two-thirds of €2.2 billion of debt, and €630 million from Switzerland’s Julius Bär. Among the German creditors: Allianz, Deutsche Bank, Munich Re’s Ergo insurance and BNP Paribas.

European bank regulator BaFin has ordered all these institutions, and dozens more, to lay out their exposure to the Austrian holding company.

If the Signa Holding self-administration goes ahead as planned, these creditors can expect 30 per cent of their investment – if anything.

Austrian experts say it is, as yet, unclear what will survive from Signa’s sprawling network of nearly 400 separate firms – or 1,000, by another estimate.

Establishing just how many companies carrying the Signa name have a Signa stake is perhaps the greatest challenge for restructuring specialist Arndt Geiwitz, called in by other holding investors in early November. Austrian media have reported that many luxury property holdings with the Signa name are, in fact, owned by complex foundations based in Luxembourg and Liechtenstein. Also unclear is whether Mr Benko or Signa own attractive assets such as the luxury villa and Ferrari F40 on Lake Garda.

“If you give the impression that you have remained a man of your word,” said Mr Benko in 2008, “you build trust and expand your circle of friends.”

Some 15 years on, many of the billionaire former friends are now creditors – and reportedly planning to sue Mr Benko for delayed insolvency filing.

On Thursday, Austria’s Krone tabloid, after assiduously documenting the self-made billionaire’s rise, gave him one final front page to seal his fall from grace: “Ben K.O.”