Wirecard, a once-valuable German fintech firm, filed for insolvency on Thursday as it battles a huge accounting scandal. About €1.9 billion went missing from the company's balance sheet according to auditors, and Wirecard later admitted the money may never have existed. In a statement Thursday, Wirecard said it filed for insolvency proceedings in the Munich district court. The news comes just days after its ex-chief executive was arrested in relation to alleged market manipulation and false accounting.
German fintech group Wirecard AG has filed for insolvency days after its CEO Markus Braun resigned and was arrested in relation to alleged market manipulation and false accounting. It is the first member of Germany's prestigious blue-chip DAX index to fail. The payments processor said in a press release Thursday that it had filed an application to open insolvency proceedings in the Munich district court "due to impending insolvency and over-indebtedness." It also said the company was evaluating whether insolvency applications have to be filed for its subsidiaries.
The company's shares were suspended from trading before it announced insolvency proceedings.
Ordinarily, a company files for insolvency when it fails to meet its financial obligations to lenders when debt payments are due.
In Germany, an insolvency administrator has the option to continue the business as long as there is hope to find an investor that will acquire it. Wirecard's shares have fallen about 90% after it admitted €1.9 billion had gone missing from its balance sheet. Later the company claimed the money may have never actually existed.
While the ex-CEO's bail was set at €5 million, he is still being investigated by German police. The Munich prosecutor's office has said "we will now look at all possible criminal offences,"Reuters reported.