Until now, the Wirecard AG scandal that crippled the German payment company has had little impact on its 1,500 employees worldwide – but that’s about to change.
Michael Jaffé, the company’s court-appointed insolvency administrator, is set to lay off hundreds of workers while others plan to resign, a source told Bloomberg News.
Meanwhile, Wirecard Bank, a separate entity that is not part of the bankruptcy filings, is expected to lay off more than 200 of its employees, the source said. When all is said and done, the workforce will be reduced to between 500 and 600.
In addition, Bloomberg reported that Wirecard’s supervisory board is expected to resign following the court’s approval, according to the source. The public announcement could happen as early as Tuesday (Aug. 25), once a bankruptcy judge in Munich approves the plan. The move comes as Jaffé works to reduce costs and protect creditors.
Once the darling of Europe's FinTech community, Wirecard filed for insolvency in June and reported debt of nearly $4 billion. Some lenders who provided cash to Wirecard have said they expect to recover as little as 20 percent of the nearly $2 billion they are owed.
Wirecard, once valued at $28 billion, admitted in June that 1.9 billion euros ($2.1 billion) said to have been deposited in two Philippines banks did not exist.
Last week, Jaffé said an agreement has been reached to sell Wirecard’s Brazilian business to Sao Paulo-based PagSeguro Digital, one of the nation’s largest mobile payment-based eCommerce companies.
“It is particularly pleasing that the sale of Wirecard Brazil has been the first success with respect to the sale of assets, because the framework conditions of the Wirecard insolvency proceedings have been, and still are, very difficult,” Jaffé said in a statement.
The terms of the Britain deal involve a sale of Wirecard Card Solutions to Railsbank Technology Ltd., the London-based banking and compliance platform backed by Visa, the administrator said. Railsbank declined to comment on the terms of the deal.
In addition, Jaffé said the sale of some of the company’s operations in Britain and North America could soon be announced.