Wirecard files for insolvency, becoming first DAX member to fail

Wirecard files for insolvency, becoming first DAX member to fail

The headquarters of Wirecard AG is seen in Aschheim near Munich
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)

BERLIN/MUNICH: Wirecard said on Thursday (Jun 25) it was filing for insolvency after disclosing a US$2.1 billion financial hole in its accounts.

The move makes it 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 per cent 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.

READ: Singapore's Grab puts partnership with troubled Wirecard on hold

The Munich-based 'fintech' collapsed less than two years after it won admission to Germany's prestigious DAX blue-chip index. At its peak it was worth US$28 billion.

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."

Source: Reuters/kv