Wirecard files for insolvency after $2.1b went missing

Bloomberg

Wirecard AG filed for insolvency proceedings after a massive accounting scandal brought the payments company to its knees.
Wirecard management cited over-indebtedness as the reason behind decision to seek court protection in Munich. The company also said it’s considering whether the insolvency proceedings should also be applied to its subsidiaries.
The company’s rapid fall from grace comes after it admitted that $2.1 billion went missing from its balance sheet, and is a major setback for Germany’s burgeoning tech scene and a debacle for investors. In less than a week, the company once hyped as the future of German finance had seen its shares and bonds collapse and its former Chief Executive Officer Markus Braun arrested in an accounting-fraud probe after almost two decades at the helm of the company.
Wirecard’s shares have been suspended in Frankfurt before the announcement. Its 500 million euros of bonds due 2024 fell 6 cents on euro to a record low of 12 cents.
The insolvency proceedings leave Wirecard’s creditors facing lengthy negotiations with administrators over how much they’ll get back out of the money they’re owed following the company’s implosion.
Banks who have 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.
For Germany, the affair represents an embarrassment. While the country has seen the likes of airline Air Berlin and renewable-energy firm Solarworld file for insolvency in past years, critics say that Wirecard’s troubles could have been spotted earlier.