From Bloomberg:
Wirecard AG filed for insolvency, the culmination of a stunning accounting scandal that led to the arrest of its CEO and left the German payment-processing firm scrambling to find over $2 billion missing from its balance sheet.
Wirecard management cited over-indebtedness as the reason behind the decision to seek court protection in Munich, according to a statement. The company also said it’s considering whether the insolvency proceedings should be applied to its subsidiaries.Wirecard Bank is not included in the proceedings, according to a person familiar with the matter, who asked not to be named, as the situation is private. German regulator BaFin is responsible for deciding whether a bank should file for insolvency, although there are also other measures it can take when a lender runs into trouble.Until earlier last week, the company was still a hot growth story that had shaken off allegations of accounting fraud. Then came the admission that 1.9 billion euros of company funds had gone missing. Shares and bonds collapsed and in less than a week, the company once hyped as the future of German finance saw its Chief Executive Officer Markus Braun first resign and then be arrested in an accounting-fraud probe after almost two decades at the helm of the company. Braun has since been released on bail.Wirecard’s shares plunged further on Thursday, dropping 80% to 2.50 euros in Frankfurt after trading resumed. Its 500 million euros of bonds due 2024 fell 6 cents on the euro to a record low of 12 cents on Thursday, according to data compiled by Bloomberg.Lenghty ProcessThe insolvency proceedings now leave Wirecard’s creditors facing lengthy negotiations with court-appointed administrators over how much they’ll get back out of the money they’re owed. Banks who lent to Wirecard, including Commerzbank AG, ABN Amro, LBBW and ING, have been demanding more clarity from the company in return for the extension of almost $2 billion in debt....
....MORE
