Wirecard, insolvency declared. First bankruptcy at Dax


The Wirecard group wants to initiate insolvency proceedings. This was announced by the same company, which ended in a scandal due to a budget hole of 1.9 billion, according to reports from the Dpa.

The board of Wirecard has today decided to submit a request to the competent Court of Monaco for the opening of an insolvency proceeding for the risk of inability to pay and over-indebtedness, the company communicated. It occurs whether an insolvency request should also be filed for Wirecard’s subsidiaries, he added. In recent days the fintech group had announced that it was more than likely that the sum of 1.9 billion, untraceable in the balance sheet, did not exist. For this reason, Wirecard had to correct the accounts and the effects are not excluded.
On the stock exchange
the stock price collapsed again in Frankfurt, plummeting to 3.55 euros (70% less), the lowest point since August 2011.

Wednesdaylast, before the scandal of 1.9 billion of non-existent liquidity broke out, the quote was at 104.5 euros and in its best days it had reached 199 euros, with a maximum capitalization of 28 billion euros, which had allowed Wirecard to enter the Olympus of the German Stock Exchange, the Dax 30 index. The stock was provisionally suspended in the morning pending the announcement of the bankruptcy procedure and the resumption of trading has collapsed from the already very low levels of the last days. Wirecard’s insolvency concerns € 3.5 billion, according to sources close to the file. The amount includes in particular 1.75 billion in loans from 15 banks and 500 million in bonds. Amounts that will probably never be repaid to creditors, if not to a small extent, as a source admits.

The scandal It broke out last Thursday when the auditor EY refused to certify the 2019 balance sheet of Wirecard, not finding confirmation of 1.9 billion euros of liquidity, theoretically deposited in banks of the Philippines, and equal to about a quarter of the company’s total assets. In a dramatic crescendo of events, while the title sank into the stock market, the CEO and founder Markus Braun resigned and was replaced on an interim basis by the new Coo James Freis, hastily named in place of Jan Marsalek. The company withdrew its 2019 and first quarter 2020 accounts. Braun was arrested at the request of the Munich prosecutor’s office and released after paying a 5 million euro bail. A arrest warrant was also issued against Marsalek, who in the meantime would have flown to Manila, according to reports. Braun, who founded Wirecard in 1999, is suspected by German justice of inflating the company’s accounts since 2002 to make it more attractive to investors and customers. The prosecutor, who specified that he searched the Wirecard headquarters on June 5, said he was ready to examine `all possible crimes. In a brief statement, Wirecard today explained that he had initiated the Munich court procedure ‘due to the impending insolvency and over-indebtedness and specified that he is evaluating similar procedures for his branches. The dossier is also thorny for the authorities of the German financial market, accused of not having carried out the necessary checks on fintech. Wirecard, which specializes in electronic payments like Paypal, has 5,800 employees in 26 countries, and is the first Dax 30 company to report insolvency.

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