(Bloomberg) -- The insolvency administrators for one of Signa’s main units is reviewing whether key advisers failed to carry out their duties properly, in a bid to recoup funds for creditors.
The administrators for Signa Development Selection — which invested in premium property projects and issued a €300 million ($327 million) publicly-traded bond — are investigating potential liability claims against tax consultancy company TPA Steuerberatung GmbH and law firm Arnold Rechtsanwaelte GmbH, according to a report dated July 15.
Lawyers at EcoLaw, working as administrators for the SDS unit, said both TPA and Arnold could be held liable for actions related to payments made just before the opening of insolvency proceedings, among other allegations. They may also bring claims against key managers at Signa, according to the report.
An official at TPA declined to comment. Representatives for Signa and officials at Arnold didn’t return emails and calls seeking comment.
Financial flows between different parts of the group founded by Austrian tycoon Rene Benko have come under close scrutiny after Signa collapsed into insolvency late last year. Austrian prosecutors are investigating alleged fraud by Benko and a Signa unit, while creditors such as sovereign wealth fund Mubadala have filed claims against some of the group’s subsidiaries.
Bonds of SDS are indicated at 12.5 cents on the euro, according to data compiled by Bloomberg.
A special administrator for Signa Holding is separately pursuing claims against BDO. It alleges that the auditor allowed forbidden transfers of funds from Signa’s subsidiaries which masked the true financial situation of the group, according to a report from Austrian newspaper Kurier.
A lawyer for Benko also didn’t return calls and emails requesting comment.
TPA and Arnold were among the few organizations that had a thorough oversight of the group. TPA in particular was instrumental in preparing financial statements for the companies in the Signa Group, according to filings. A partner at the consultancy sat on the board of Benko’s now-insolvent private foundation.
TPA said they would co-operate with the investigation of facts, according to the report, while Arnold has already submitted information in response to questions.
EcoLaw also said that they asked Benko and SDS’s current and former directors to recognize liability claims as they allegedly took on excessive debt and incorrectly presented the company’s financial situation. Representatives for the directors, however, have rejected the allegations.
Signa Development has earmarked up to €300,000 per month for legal costs, Ecolaw said, and the administrators are considering the possibility of working with litigation financiers in the proceedings.
--With assistance from Marton Eder.
(Recasts first paragraph, adds bond price in sixth.)
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