Wirecard, the embattled Germany payment services company, said Thursday (June 25) it was filing for insolvency.
The decision comes less than a week after auditors disclosed $2.1 billion of supposed deposits were missing from two Philippines banks. Shares have fallen by more than 90 percent and the company has lost nearly $12 billion of market value.
Wirecard becomes the first member of the country’s Frankfurt Stock Exchange to go out of business, ChannelNew Asia.com (CNA) reported.
In a statement, Wirecard said its new management decided to apply for insolvency at a Munich court “due to impending insolvency and over-indebtedness,” and was considering whether to to file for insolvency for its subsidiaries, the report said.
Founder and CEO Markus Braun resigned last week and was arrested Monday night (June 22) on charges of misrepresenting Wirecard’s accounts and market manipulation. He posted bail of 5 million euros ($5.6 million) and was released Tuesday (June 23).
Munich prosecutors said, “We will now look at all possible criminal offenses,” CNA reported.
The Wall Street Journal reported this latest chapter represents the collapse of a company that until recently was a shining star in Europe’s tech scene.
Wirecard’s shares skyrocketed under Braun, 50, who promoted the FinTech company as a money-making machine whose payments processing business would be essential for global commerce, the WSJ reported.
Braun has denied any wrongdoing and said allegations about its accounting practices are false and misleading, the newspaper reported.
Justice Secretary Menardo Guevarra said he told state investigators to coordinate with Bangko Sentral ng Pilipinas, the Philippines central bank, on the inquiry.
In another development this week, Jan Marsalek, Wirecard’s chief operating officer, was fired after BDO Unibank Inc. and the Bank of the Philippine Islands said the deposits were never made.
In addition, Munich prosecutors have said they may seek Marsalek’s arrest, the German business daily newspaper Handelsblatt reported, according to Reuters. The two countries do not share an extradition treaty.