(Bloomberg) -- Bonds of Signa Development Selection AG, part of Rene Benko’s sprawling property and retail conglomerate, were thrust into default after a subsidiary of the company filed for insolvency.

S&P Global Ratings lowered its rating on the €300 million ($331 million) note due in 2026 to D from CC, citing a notice on the default event by the bondholder representative. B A I Bauträger Austria Immobilien GmbH, a company indirectly held by Signa Development, filed for insolvency in Austria on Thursday, according to a court notice.

The default takes Signa Development and its bondholders closer to joining broader insolvency proceedings that have already amassed other parts of the Signa group, including its umbrella organization.

Signa Development’s shareholders include Rene Benko, construction tycoon Hans Peter Haselsteiner’s family trust and the Swiss coffee-machine maker Arthur Eugster. The company, which manages a development portfolio of €8.3 billion, warned investors this month that it would likely apply for insolvency proceedings.

Arini, the hedge fund founded by former Credit Suisse debt trader Hamza Lemssouguer, is among the largest owners of the bonds, Bloomberg reported in November. The notes - the only publicly traded instruments issued by the Signa group, were quoted at less than 10 cents on the euro Friday.

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