More divisions of property developer Signa are reportedly preparing for insolvency following in the footsteps of their Vienna-based holding company which went into insolvency owing roughly $5 billion (€4.64 billion). 

If all of its subsidiary companies were to go bankrupt the total debt could rise as high as $30 billion (€27.81 billion) - sending shockwaves across Europe's embattled real estate sector.

"So far one company of this group of companies has filed for bankruptcy," Georg Kodek, Professor at Vienna University of Economics and Business, explained to CGTN. "Now below there are as many as 1,000 separate companies. 

"We do not know at present about the debts of these companies. It could be up to 20 or 30 billion [dollars]. But we are not sure. It is way too early."

READ MORE

PM Donald Tusk: A new dawn for Poland?

Planned migration can be 'win-win' for climate displacement and labor shortages

Copenhagen's all-timber neighborhood

Despite this huge sum, the academic doesn't believe that Europe's property sector is in serious danger.

"I would not take the Signa holding bankruptcy as an indication for the state of the entire real estate sector," he said.

Signa is not only a symbol of Europe's property crisis but also of a lavish corporate culture. 

The Austrian insolvency administrator decided to cut off all of Signa's non-essential business activities to preserve cash - including party planners, hunters and private jet crew - which apparently made up the majority of the property developing group's staff.

Preserving cash is also the number one priority for Creditreform CEO Gerhard Weinhofer who represents the banks that loaned Signa money, which they fear they won't get back. 

He will be petitioning the administrator steering the company through insolvency to return as much of the debt as possible.

"The creditors are not amused by the situation. It's a tough case, it will be a hard ride," Weinhofer told CGTN. 

"I think the likely outcome is to accept the restructuring plan on February 12 and to get the 30 percent of insolvency quota for the creditors," he said.

Thirty percent would be about $1.5 billion (€1.39 billion) - it remains to be seen whether this amount is available. 

As construction works at most of Signa's landmark projects have ground to a halt, Austria is trying to salvage what's left of the worst business failure in the country's history.

Meanwhile, uncertainty prevails about the total amount of Signa group's debt. The problem seems to be the group's reluctance in the past to provide information on their turnover - allegedly violating European Union law.

Subscribe to Storyboard: A weekly newsletter bringing you the best of CGTN every Friday