(Bloomberg) -- Signa Development Selection AG, one of the major units of the retail and real estate empire founded by Rene Benko, is facing insolvency as a result of a cash crunch within the division. 

“It seems predominantly likely that the Issuer, SIGNA Development and further companies of the SIGNA Development group will apply for the opening of insolvency proceedings in the very near term,” the debt issuing entity of the company said in a filing Friday. 

The unit, which issued Signa’s only publicly-traded corporate bond, said the probable decision would constitute an event of default under the notes, which mature in 2026.

The decision follows the opening of insolvency procedures for multiple companies within the Signa group, in what is likely to be one of the largest European real estate company collapses since the global financial crisis. Units have succumbed to severe cash shortages that have arisen as interest rates have soared and property valuations plummeted. 

Insolvencies across the group have come piecemeal, with Signa Holding — the main shareholder in units including Signa Prime and Signa Development — filing for insolvency in Austria last week. Other smaller units of the group have also kicked off proceedings in Germany and Switzerland.

Previously: Signa Files Insolvency as Cash Crunch Fells Luxury Empire 

S&P Global Ratings dubbed a default by Signa Development as a “virtual certainty” earlier this week, pointing to likely contagion from the rest of the group. While the unit is technically isolated from Signa Holding’s insolvency, it shares a lot of banking partners and suppliers, S&P said. 

Signa Development attracted the ire of its investors in its latest results, after it revealed it was owed hundreds of millions of euros by other parts of the group. Bondholders had been considering whether the move was in breach of debt rules. 

Notes issued by Signa Development are indicated at around 10 cents on the euro, according to data compiled by Bloomberg. That’s down from around 60 cents at the end of October.

©2023 Bloomberg L.P.