Sina: Now it's about compensation.

As with Wirecard, those responsible for the Cigna bankruptcy are targeting auditors. A lawsuit has been filed against auditing firm BDO.

In bankruptcy, there is usually not enough for creditors to get enough to pay off all the debts owed. That's why you look around to see who can pay for the damage.

In the Wirecard case, for example, it is not just several former DAX Group directors who have to answer in court. The insolvency administrator is suing the long-standing audit firm EY Germany for billions. Thousands of investors are also taking the auditors to court.

Private officer files lawsuit against BDO

At Signa, the holding company’s special administrator is now targeting local audit firm BDO, the Courier reported. Signa Holding was a shell company that was worth little without its subsidiaries, which still owned real estate. With the bankruptcy of its two most important companies, Signa Development and Signa Prime, the holding company was left in the grip of bankruptcy. Since then, the insolvency administrator has focused on reaching a settlement with the collapse of the once-glamorous real estate group. Experts have been hired for months to focus more on auditing the company’s network of real estate, retail and media.

At the request of the insolvency administrator, the Vienna Commercial Court has appointed its own administrator to review the confirmation of claims against the auditors, BDO Assurance GmbH. The special administrator, Raoul Wagner, has now taken action. The Viennese lawyer has filed a lawsuit against BDO.

Should Signa Holding have declared bankruptcy earlier?

The main concern is that Signa Holding’s auditor did not criticize the return of blocked deposits that, according to the lawsuit, took place in 2021 and 2022. According to Wagner, the company’s over-indebtedness under insolvency law amounted to around €384 million at the end of fiscal year 2021 and up to €972 million at the end of fiscal year 2022.

“If BDO had properly conducted the audits of Signa Holding’s 2021 and 2022 annual financial statements, exercised its obligation to speak and not issued unqualified audit opinions, insolvency proceedings could have been initiated by Signa Holding’s management or one of its creditors (investors),” the lawsuit states. This would have been the case at the end of April 2022 and not in the fall of 2023, during the review of the 2021 balance sheet, at which point “lenders would have refrained from investing in Signa Holding or made outstanding investments.”

Signa demands payment of fees

Furthermore, Signa Holding will only be entitled to distribute retained earnings from its subsidiaries. All other distributions are prohibited. In fact, the company is said to have received funds (credits and loans) from its subsidiaries in the amount of EUR 410 million in 2021 and around EUR 1.03 billion in 2022. For special administrator Wagner, this was a clear case: Signa Holding’s debts to its subsidiaries were “immediately due and could not be deferred or set off”.

BDO must now take responsibility for this. The audit firm must be held liable for the damage resulting from the difference in assets between the time of the issuance of the 2021 audit report as of April 2022 (or the 2022 balance sheet audit report as of June 2023) and the opening of insolvency proceedings against Signa Holding at the end of November 2023. In addition, fees of €249,600 must be paid.

KPMG, PwC and TPA are also in focus.

The restructuring officials also have other auditors such as KPMG as auditors for Signa Prime and Signa Development under their watch. PricewaterhouseCoopers and tax advisory firm TPA should also be considered. According to the report, the complaint against BDO is said to be 37 pages long and was submitted to BDO on June 27. BDO declined to comment on the matter when asked by the “press.”