Signa, Austria's real-estate giant, announced on Wednesday that it plans to file for insolvency, following its German subsidiary, which also took the step recently.

The holding company will apply for the opening of reorganization proceedings with self-administration at the Vienna Commercial Court on Thursday, it said.

"Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be sufficiently secured, so Signa Holding GmbH is applying for restructuring proceedings with self-administration," the company said in a statement.

Why is the real-estate giant suffering?

Once a strong property and retail group, the firm has been in crisis for months.

Its troubles began with the start of Russia's war in Ukraine, which affected the property sector across Europe due to increased construction and energy costs, as well as higher interest rates.

The group owns numerous commercial properties in Germany and Austria, with a vast portfolio including New York's iconic Chrysler building.

In Germany, it owns the struggling department store group Galeria Karstadt Kaufhof, and has a number of incomplete development projects in the hearts of several major cities around the nation.

Construction on its 245-meter (804-foot) high Elbtower in Hamburg, for instance, has ground to a standstill as a result of the company's financial troubles.

Retail chain Galeria says it does not expect to be affected by the insolvency proceedings, the Reuters news agency quoted an anonymous insider from the department store as saying. 

Signa's owner, entrepreneur Rene Benko, announced he was stepping down as chairman of the Signa Advisory board earlier in November, succumbing to shareholder pressure.

Benko started the company in 2000, growing it into a major real-estate and media conglomerate.

Signa has offices in Austria, Germany, Italy, Luxembourg and Switzerland. According to the company's website, it currently has holdings worth €27 billion ($29.6 billion) and projects worth €25 bilion in development.

The bank JP Morgan says Signa has an estimated €13 billion in liabilities.

rmt,js/fb (AFP, dpa)