German payments firm Wirecard files for insolvency after revealing $2 billion accounting black hole
- Wirecard said management had decided to open the proceedings "due to impending insolvency and over-indebtedness."
- The company revealed last week that 1.9 billion euros of cash on its balance sheet had gone missing.
- Wirecard shares collapsed another 79% after trading in them was briefly halted.
Wirecard will file for an application to open insolvency proceedings with the district court of Munich, the company said Thursday.
The company said in a short statement that management had decided to seek court protection "due to impending insolvency and over-indebtedness."
It marks a tumultuous fall for Wirecard, once a high-flying tech darling in Germany, after the company revealed that 1.9 billion euros ($2.1 billion) of cash on its balance sheet had gone missing.
A further admission on Monday that the cash likely did not exist further compounded Wirecard's troubles, with the firm attempting to reach a deal with creditors on a financing lifeline.
The accounting irregularities, first uncovered by the Financial Times in an investigation last year, have also threatened to tarnish the reputation of Germany's financial regulator, BaFin.
Wirecard said it was also evaluating whether insolvency applications would have to be filed for its subsidiaries. The company controls a bank in Munich as well as a card-issuing unit in the U.K.
Wirecard's collapse comes after former CEO Markus Braun was arrested in Munich on charges of inflating the company's balance sheet. Braun has since been released on a 5 million-euro bail and has to report to police once a week.
Braun, who led Wirecard for 18 years, took the company from a little-known processor of payments for gambling and porn sites to one of Germany's hottest tech investment targets.
He helped with listing the firm on Germany's prestigious DAX 30 index in 2018, ousting one of the country's most well-known lenders, Commerzbank.
But Wirecard has seen its share price capitulate since, falling from as much as 100 euros last week to less than 4 euros on Thursday due to the additional revelations in its accounting scandal. Wirecard shares collapsed another 79% after trading in them was briefly halted on Thursday morning.
Wirecard had attempted to locate the missing cash, alleged to be held with two banks in the Philippines. But that hunt came to a crashing halt after both of the banks denied any business ties with Wirecard and documents purporting to show the company deposited funds with them had been falsified.
The Philippines is seeking to find former Wirecard Chief Operating Officer Jan Marsalek — who was dismissed from the company this week — in an investigation into individuals allegedly involved in the case.