German electronic payments company Wirecard is filing for insolvency. Worth $28 billion at its peak, Wirecard becomes the first DAX company to go out of business
FRANKFURT/MUNICH - Wirecard collapsed on Thursday owing creditors almost $4 billion after disclosing a gaping hole in its books in Germany’s worst accounting scandal.
“The Wirecard case damages corporate Germany. It should be a wake-up call for reforms,” said Volker Potthoff, chairman of corporate governance think-tank ArMID. The collapse of Wirecard, once one of the hottest financial technology companies in Europe, dwarfs other German corporate failures. It has shaken the country’s financial establishment, with Felix Hufeld, the head of regulator BaFin, saying this week the scandal was a “total disaster”.
“It is frightening how long Wirecard AG was able to operate without being objected to by the auditors,” partner Wolfgang Schirp said.Wirecard’s new management had been in crisis talks with creditors but pulled out on Thursday morning “due to impending insolvency and over-indebtedness”. The ascent of Wirecard, which was founded in 1999 and is based in a Munich suburb, was dogged by allegations from whistleblowers, reporters and speculators that its revenue and profits had been pumped up through fake transactions.
FILE PHOTO: 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. REUTERS/Michael Dalder
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