Thursday 25 June 2020 10:25 am

Wirecard files for insolvency after disclosing €1.9bn financial hole

Wirecard has filed for insolvency after disclosing a €1.9bn financial hole in its accounts.

Shares in the firm were suspended by the Frankfurt Stock Exchange before the announcement. Last week shares in the firm fell by 90 per cent after auditor EY refused to sign off Wirecard’s 2019 accounts.

In a statement today, the embattled payments processor said its new management had applied for insolvency at a Munich court “due to impending insolvency and over-indebtedness”.

It also said it was evaluating whether to file for insolvency for its subsidiaries.

The Munich prosecutor’s office, which is already investigating former boss Markus Braun, said: “We will now look at all possible criminal offences.”

Braun, the longstanding chief executive who resigned last week, was arrested earlier this week and released on €5m bail.

He is accused of misrepresenting Wirecard’s accounts and of market manipulation by falsifying income from transactions with so-called third-party acquirers.

On Monday the firm said there was a likelihood that the missing billions from its accounts simply did not exist.

Wirecard’s problems arose last October after the Financial Times reported that Wirecard employees had appeared to have conspired to fraudulently inflate numbers at the firm’s subsidiaries in Dubai.

In April KPMG concluded it could not verify whether the “lion’s share” of profits reported between 2016 and 2018 were genuine, after a special audit.

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