Wirecard collapses on $4 billion in debts days after CEO Braun's arrest

by   |  VIEW 1974

Wirecard collapses on $4 billion in debts days after CEO Braun's arrest

In the face of a roughly $4 billion in debts, the scandal-hit Europe’s second-largest payment processor Wirecard AG collapsed on Thursday after its London-based auditor EY had disclosed a cavernous hole at its 2019 balance sheet what the auditor had branded as the result of a sophisticated global fraud.

The German fintech company, which had been added into the Germany’s blue-chip index DAX less than a couple of years back, had filed for bankruptcy in a Munich court on Thursday citing that a $1.5 billion in debts due in seven days had not been assured given the scale of criticisms the German payment processor had been digesting after reveal of a missing €2 billion from its balance sheet.

In point of fact, latest move from the Wirecard AG came forth a couple of days after the Wirecard Chief Executive was arrested over allegations of fraudulent transactions alongside securities market rigging by adding nearly €2 billion at its balance sheet between 2016 and 2018 that in actuality had never existed.

In factuality, the ongoing ruckus over the German payments firm had been brought into light later last week after its auditor had declined to sign off the fintech firm’s 2019 balance sheet over missing €2 billion.

Later, a search for the missing amount hit a dead-end in Philippines after the southeast Asian country’s Central Bank had told that the money had never entered into Philippines’ financial system. Earlier this week, the Wirecard CEO had resigned after termination of a nearly $2 billion in debts from its creditors due to the mass-scale mishap at its balance sheet.

Wirecard provided false confirmation regarding $2.1 billion escrow amounts

Meanwhile, as Wirecard drawdown was nearing following the arrest of its Chief Executive Markus Braun, who had been forced to admit earlier this week that the missing €2 billion might not exist, adding that the once-adored German fintech firm, which had disclosed a number of gaping loopholes in German financial system and raised possibilities of a sweeping reform, had provided a number of false confirmations regarding the missing escrow amounts to its decade-long auditor and the relevant authorities including the German Securities and Exchange Commission, EY said in a statement on Thursday, “There are clear indications that this was an elaborate and sophisticated fraud involving multiple parties around the world”.

Wirecard AG had $1.3 billion worth of assets before filing for the insolvency, while it had borrowed nearly $1.75 billion from 15 lenders and had issued €500 million in bonds, which creditors said the German payments firm would unlikely to pay off amid a shattered reputation given the extent of fraudulent transactions it had been fabricating over the recent years.