Troubled Debit Card Issuer Wirecard Files for Insolvency

Troubled Debit Card Issuer Wirecard Files for Insolvency

In a statement on Thursday, the firm said its new management had made a decision to apply for insolvency at a Munich court "due to impending insolvency and over-indebtedness".

Wirecard, which was launched as a start-up in 1999, joined Germany's prestigious Dax 30 share index two years ago at a valuation of €24bn. It processes digital payments for both consumers and businesses and reported revenues of more than €2 billion in 2018, more than triple the figure from 2014.

Wirecard's shares have tanked as mounting accounting irregularities have come to light at the former hot tech German startup, which on Friday called in investment bank Houlihan Lokey to evaluate its options. They have lost 97 percent since auditor EY questioned its accounts last Thursday.

With the disclosure of the financial hole wiping out a decade of cash flows, it will be tough for Wirecard to survive even with a debt restructuring as underlying profitability could be weak, said Richard Sbaschnig, a forensic accountant at CFRA.

Over the weekend, banks in the Philippines said documents produced by Wirecard appeared to be false, and the Philippines central bank also said the money had never entered its financial system.

Amazon launches $2billion fund to invest in climate change mitigation
Amazon has faced criticism, including from some of its own employees, that it has failed to move quickly enough on climate change. Last spring, more than 3,500 employees penned an open letter to Bezos, urging a companywide plan to address climate change.

A second source close to talks with creditors said although the company had a healthy core, about two-thirds of sales had been faked in its accounts.

Shares in Wirecard plummeted 80 per cent to their lowest since January 2006 after the company said it was filing for insolvency.

After claiming last week that €1.9bn had gone missing from escrow accounts in the Philippines, and that it may have been the victim of "considerable fraud", Wirecard then said "there is a prevailing likelihood that the bank trust account balances in the amount of €1.9bn do not exist". While the FT detailed suspected fraud and suspicious transactions at Wirecard, BaFin's immediate efforts previous year appeared to be mainly geared towards containing the damage from the allegations by banning investors from betting against the stock.

Although a warrant against the 50-year-old Austrian has been lifted, he remains under investigation by Munich prosecutors who suspect him of misrepresenting Wirecard's accounts and falsifying income.

Braun was released on Tuesday after posting €5m in bail. Former chief operating officer Jan Marsalek is also under suspicion and is believed to be in the Philippines, according to justice officials there.

Related Articles