Wirecard Shares Plummet 80% After Company Files For Insolvency Proceedings

Wirecard Shares Plummet 80% After Company Files For Insolvency Proceedings Tyler Durden Thu, 06/25/2020 - 05:56

Update (5:59ET): Wirecard's shares plunged by 80% since reopening after a trading halt was issued at the time the company filed an application for insolvency. 

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German payments company Wirecard filed for insolvency proceedings on Thursday, one week after auditors refused to sign off on accounts due to a $2.1 billion financial hole, reported Reuters. 

A statement from the company warned about over-indebtedness as the primary reason behind applying for insolvency in Munich, Germany. There's also a consideration by Wirecard management to apply insolvency proceedings to its subsidiaries.

• MANAGEMENT BOARD OF WIRECARD AG HAS DECIDED TODAY TO FILE AN APPLICATION FOR OPENING OF INSOLVENCY PROCEEDINGS FOR WIRECARD AG WITH COMPETENT DISTRICT COURT OF MUNICH (AMTSGERICHT MÜNCHEN) DUE TO IMPENDING INSOLVENCY AND OVER-INDEBTEDNESS.
•  WIRECARD AG - IT IS CURRENTLY EVALUATED WHETHER INSOLVENCY APPLICATIONS HAVE TO BE FILED FOR SUBSIDIARIES OF WIRECARD GROUP.

Shares on Thursday morning trading on the Frankfurt Stock Exchange have been suspended until further notice. They have lost more than 90% on a year-to-date basis. Most of the losses began last week when Ernst & Young refused to sign off on 2019 accounts, which then resulted in the resignation and arrest of CEO Markus Braun. 

With shares suspended in Frankfurt -  500 million euros of bonds due 2024 fell to a record low of around 10-12 cents. 

The German-based payments company collapsed about two years after it joined Germany's DAX blue-chip index. Before whistleblowers exposed the company for fraud in early 2019 - the company had a peak value of $28 billion. 

The collapse of Wirecard is an embarrassment for Germany and regulators who failed to investigate what appears to be one of the country's worst-ever accounting scandals. 

"The Wirecard scandal did not come out of the blue," said Florian Toncar, a member of parliament for the business-friendly FDP. "It's a mystery to me why the finance minister and BaFin did not shed light on the matter much earlier."

The Munich prosecutor's office said: "We will now look at all possible criminal offenses" for Braun. 

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Wirecard Shares Plummet 80% After Company Files For Insolvency Proceedings