Adds lawyer comment paragraphs 6-7

By Francois Murphy

VIENNA, July 2 (Reuters) - Austria's Supreme Court on Thursday upheld ex-billionaire Rene Benko's first of two convictions for insolvency fraud, for which he was sentenced to two years in prison, but ordered a retrial on a separate charge on which he had been acquitted in the same case.

The cases are the first criminal proceedings stemming from the collapse of property group Signa that Benko founded. At its peak, Signa controlled a vast portfolio of luxury real estate and retail assets, including New York's Chrysler Building and Britain's Selfridges department stores.

Signa's failure in late 2023 became Austria's biggest bankruptcy, and prosecutors estimate the financial harm caused by suspected crimes committed in relation to the collapse to be around €1.5 billion ($1.7 billion).

The conviction relates to a €300,000 transfer to Benko's mother when Signa was already in financial difficulty. Prosecutors said it was an attempt to put assets beyond the reach of creditors, an allegation Benko denies.

The Supreme Court upheld that conviction, leaving Benko no further recourse for appeal. However, it ordered a retrial on a separate charge relating to whether €360,000 up-front rent and other payments for a house in Innsbruck was also an attempt to put assets out of creditors' reach.

"We are optimistic we will be able to obtain an acquittal the second time around," Benko's lawyer Thomas Pillichshammer, told reporters after the ruling by a five-judge panel.

He said the defence would present new arguments, but he declined to say what they were. Benko, 49, did not attend the appeal hearing. He denies all wrongdoing.

At the retrial, the lower court will have to pronounce a new total sentence covering the first or, if Benko is convicted on the second count as well, both counts.

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