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The chief executive of Signa Group’s two most important subsidiaries has been fired because of alleged “gross violations” of his duties at the crisis-stricken European luxury property conglomerate.
Timo Herzberg, an appointee and ally of Signa founder René Benko, has had his contract terminated with immediate effect, the group said on Monday evening.
“Unfortunately, we had to make this decision and take this hard step,” said Alfred Gusenbauer, the chair 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 per cent 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 violations of duties as a board member”.
The two companies own the majority of Signa Group’s most important property 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 administration in the coming days, following the collapse two weeks ago of their parent company, Innsbruck-based Signa Holding.
Herzberg could not be immediately reached for comment.
His ousting is the most public demonstration of an increasingly fraught power struggle within Signa as the sprawling, leveraged property group begins to fall apart, leaving creditors and shareholders of its 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 high-profile victim of a downturn in the commercial real estate market.
Although Benko has held no official role in the management of the business since 2013 — after being convicted of bribery in his native Austria — he has long exerted almost complete control of the business through a complex network of holding companies, foundations and trusts.
Minority shareholders staged a rebellion in November in order to try to gain control of the company ahead of what they perceived to be its impending financial collapse.
Benko has fought to maintain control, complicating an already potentially byzantine administration process.
Many creditors and minority shareholders of the privately controlled group have privately raised significant concerns in recent days over the way Benko — still the largest shareholder — ran its financial affairs, according to multiple people familiar with their discussions, shifting assets, cash and debts around in a way that has left some unaware of what assets they have a claim on.
Herzberg — a founder of German property 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 the Signa prime portfolio is excellent, and [Signa Development] projects, which are located in the top locations of German-speaking cities, are very good.”