Wirecard files for insolvency after ex-CEO was arrested in EUR 1.9 bln scandal

Friday 26 June 2020 11:21 CET | News

Wirecard has filed for insolvency, just days after a EUR 1.9 billion accounting scandal at the company was unveiled, thus leading to the arrest of its former chief executive.

According to CNN, the company has opened legal proceedings in Munich ‘due to impending insolvency and over-indebtedness’. Besides, its shares, which have lost 90% of their value in less than a week, decreased in Frankfurt after the announcement was made.

Markus Braun, the company's CEO, was arrested on suspicion of having artificially inflated the company's balance sheet and sales through fake transactions. Therefore, Wirecard acknowledged on 22 June 2020 that EUR 1.9 billion in cash included in financial statements probably never existed in the first place. Subsequently, the company withdrew its preliminary results for 2019, the first quarter of 2020, and its profit forecast for 2020.

Furthermore, Braun, who has been released from custody on bail of EUR 5 million, has suggested that Wirecard may itself be the victim of fraud. However, his lawyer has not responded to requests for comment. Moreover, in a statement, Wirecard declared its bankers were threatening to call in loans worth EUR 1.3 billion by 1 July 2020, and in the absence of an agreement with creditors, its future as a going concern could not be assured, CNN reported.

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Keywords: Wirecard, insolvency, accounting scandal, Markus Braun, shares, fraud, fake transactions
Categories: Payments & Commerce
Countries: World
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