The parent group of Brown Thomas and Arnotts, Signa, has today filed for insolvency after a last-minute attempt to raise emergency funding failed.

Signa, owned by Rene Benko, said it made the filing today in Vienna with the goal of managing its restructuring as a debtor-in-possession, the company said.

Signa Group also co-owns Selfridges in London and the Chrysler Building in New York.

Brown Thomas Arnotts operates shops in Dublin, Cork, Limerick and Galway.

It was sold as part of the sale of the Selfridges group to Thai-headquartered Central Group and Austrian Signa Holding last December in a deal said to be worth €4.7 billion.

In a statement today, Brown Thomas Arnotts said today's news on Signa Holding does not change anything for the group as it trades independently of any support from shareholders.

"We welcomed the news earlier this month that Central Group is to become the majority shareholder in the Selfridges Group clearly demonstrating their unwavering support for the business," the retailer said.

"At Brown Thomas and Arnotts, its business as usual. We are all focused on the Christmas period and welcoming our customers into our stores for an exceptional shopping experience," it added.

Today's decision by Signa to declare insolvency makes it the biggest casualty so far of Europe's property crash.

The multi-billion-euro group, whose tentacles reach from Germany's best-known department stores, Berlin's KaDeWe Group, to the country's top department store chain Galeria and a project to build a skyscraper, is set to send ripples across the continent's embattled property sector.

Austrian chancellor Karl Nehammer sought to play down the significance of the company's collapse.

"What's really important is that all those who invested here, especially the banks, stay stable," he told journalists. "That's critical."

Research by analysts at Austria's Raiffeisen Bank International, one of Signa's biggest lenders, warned earlier this week that its difficulties could trigger a wider drop in commercial property prices.

Signa's holding company in Austria said it would apply to a Vienna court to begin insolvency proceedings, and start a reorganisation of the group.

"The aim is the orderly continuation of business operations and the sustainable restructuring of the company," it said.

Signa was majority owned and controlled by Benko, although a number of other wealthy individuals, including Austrian industrialist Hans Peter Haselsteiner, had smaller stakes.

The steepest rise in borrowing costs in the 25-year history of the euro has caused property prices to tumble in Germany, where much of the group's business is anchored.

Signa blamed its problems on external factors affecting its property business and pressure on high-street shopping.

"It will be a little bit of a rude awakening for investors as they do see the lags in monetary policy eventually catching on," said Aneeka Gupta, an equity strategist at investment manager WisdomTree.

The group, which values its assets at €27 billion, is made up of numerous subsidiaries. JP Morgan estimated its liabilities at €13 billion.

Its insolvency leaves a trail of half-finished construction projects across Germany, including one of the country's tallest buildings.

It had been making steady progress on the planned 64-story Elbtower skyscraper in Hamburg, until it stopped paying the builder, who halted work. Construction has also halted at five other Signa sites in Germany.

The planned 64-story Elbtower skyscraper in Hamburg

Dozens of banks, insurance companies and pension funds have over the years financed and invested in Signa companies, bond sale prospectuses and a Signa presentation seen by Reuters show.

Signa has borrowed heavily from banks, including Switzerland's Julius Baer, which disclosed that it had an exposure of more than 600 million Swiss francs ($678m).

The financial links are especially strong in Austria, where Signa was founded and is headquartered.

Raiffeisen Landesbank Niederoesterreich-Wien, Raiffeisen Landesbank Oberoesterreich and Erste Group are also among the banks with exposures to Signa.

Other lenders include Austria's Raiffeisen Bank International.

Earlier this month, one of its executives, Hannes Moesenbacher, identified a large exposure to a client of €755m, referring to Benko's group, according to a person with knowledge of the matter.

BayernLB and Helaba, the regional state-backed banks for two of Germany's most affluent states, Bavaria and Hesse, have each lent the group several hundreds of millions of euros, said people with knowledge of the matter.

Germany, Europe's largest economy, is in the middle of a property crisis after a sharp rise in interest rates and building costs forced some developers into insolvency and put deals and construction on hold.

The real estate sector was a bedrock of Germany's economy for years, accounting for roughly a fifth of output and one in 10 jobs.

Fuelled by low interest rates, billions were funneled into property, which was viewed as stable and safe until the latest spike in borrowing costs.

Weakness in commercial property in the US, with offices still empty after the pandemic, and the struggles of major property developers in China have focused global attention on the sector.

Additonal reporting from Reuters