Wirecard files for insolvency, becoming first DAX member to fail

Reuters

Posted at Jun 25 2020 05:16 PM

Wirecard files for insolvency, becoming first DAX member to fail 1
The headquarters of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions is seen in Aschheim near Munich, Germany April 25, 2019. Michael Dalder, Reuters/File Photo

BERLIN/MUNICH, Germany -- Wirecard said on Thursday it was filing for insolvency after disclosing a $2.1 billion financial hole in its accounts, becoming the first sitting member of Germany's blue-chip share index to go out of business.

Shares were suspended by the Frankfurt Stock Exchange before the news. They have lost more than 90 percent since auditor EY refused to sign off on the 2019 accounts last week, leading to the resignation of long-time CEO Markus Braun.

Wirecard said in a two-paragraph statement that its new management had decided to apply for insolvency at a Munich court "due to impending insolvency and over-indebtedness".

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

The Munich-based 'fintech' collapsed less than two years after it won admission to Germany's prestigious DAX blue-chip index. At its peak worth $28 billion, the company becomes the first sitting member of the DAX to collapse.

The Munich prosecutor's office, which is already investigating Braun on suspicion of misrepresenting Wirecard's accounts and of market manipulation, said: "We will now look at all possible criminal offences."