What: The Economist gives a close look at the situation at Signa and Reneé Benko’s situation

Why it is important: Many department stores could be impacted by the situation if it was to become out of control

René Benko, founder of Austrian property giant Signa, is facing significant challenges as his company, known for owning high-profile assets like the Chrysler Building and London's Selfridges, undergoes urgent restructuring. Despite attempts to project strength, including a lavish party with Boney M’s performance, Signa is grappling with unclear, yet substantial debts and is pressured to raise capital or sell assets in a difficult real estate market.

Benko, who built a vast empire and became a billionaire before 40, is being pushed out of the boardroom by minority co-investors. Signa's complex ownership involves various trusts and holding companies across different regions, and its debts are collateralized against individual properties.

The restructuring process is being led by German expert Arndt Geiwitz, who is tasked with finding long-term solutions and possibly raising fresh capital or selling assets. Signa faces immediate challenges like unfinished projects and a €200 million private bond due for repayment.

Financial regulators and banks, particularly Austrian ones like Raiffeisen, are closely monitoring the situation, assessing their exposure to potential losses. The Thai Central Group, co-owner of some of Signa's valuable properties, might emerge as a potential buyer. Meanwhile, Benko's involvement in a corruption investigation and his controversial business practices, including dealings with major European retail chains and a significant stake in Austria's largest newspaper, add to the complexity of the situation.

How tycoon behind Selfridges was forced out