Wirecard, the troubled German company that was embroiled in a $ 2.1 billion loss scandal, said Thursday it would file an insolvency lawsuit.
The electronic payments company said that “imminent insolvency and over-indebtedness” had forced her to apply to open court proceedings in Munich to deal with her debt. The filing will lead to negotiations between creditors and administrators about how much money will be returned to them.
Wirecard shares have fallen 90 percent in the past week after the company’s auditor, EY, refused to sign its annual report. That prompted Markus Braun, Wirecard’s chief executive, to resign last Friday.
He was then arrested this week by Munich authorities on suspicion of market manipulation. After his arrest, Mr. Braun was released on bail for € 5 million, or about $ 5.6 million. His attorney has not responded to requests for comment.
Questions about Wirecard’s finances have swirled for years, but this month’s collapse began when EY said it couldn’t find $ 2.1 billion in its accounts. The company later admitted that the funds probably “don’t exist.”
German prosecutors accused Mr. Braun of misrepresenting Wirecard’s profits by inflating his sales with counterfeit income through the use of so-called third-party acquirers, which provide payment-related services.
Mr. Braun was replaced as CEO by James Freis, a former compliance officer on the German stock exchange, who had been hired to serve on Wirecard’s board of directors only the day before.
Braun, 50, made Wirecard of a small Bavarian company a favorite in the financial technology sector. It became so dominant that it removed Germany’s Commerzbank from the DAX stock index in 2018.
