Wirecard trading halted as it files for insolvency

(Bloomberg) — Wirecard AG filed for insolvency, following the arrest of its CEO amid a massive accounting scandal that left the German payment-processing firm scrambling to find over $2 billion dollars missing from its balance sheet Wirecard management cited over-indebtedness as the reason behind the decision to seek court protection in Munich, according to a statement. The company also said it’s considering whether the insolvency proceedings should also be applied to its subsidiaries. The company’s rapid fall from grace comes after it admitted that 1.9 billion euros went missing from its balance sheet, and is a major setback for Germany’s burgeoning tech scene and a debacle for investors. In less than a week, the company once hyped as the future of German finance had seen its shares and bonds collapse and its former Chief Executive Officer Markus Braun arrested in an accounting-fraud probe after almost two decades at the helm of the company. Wirecard’s shares plunged 80% to 2.50 euros in Frankfurt after trading resumed. Its 500 million euros of bonds due 2024 fell 6 cents on the euro to a record low of 12 cents on Thursday, according to data compiled by Bloomberg. The insolvency proceedings leave Wirecard’s creditors facing lengthy negotiations with administrators over how much they’ll get back out of the money they’re owed following the company’s implosion. Banks who lent to Wirecard including Commerzbank AG, ABN Amro, LBBW and ING have been demanding more clarity from the company in return for the extension of almost $2 billion in debt. Wirecard has licenses with Visa, Mastercard and JCB International, through which Wirecard’s banking arm issues its credit cards. If Wirecard is unable to find its missing cash, Visa and Mastercard may have cause to revoke the licenses. “The big question is whether they retain the Visa and Mastercard licenses,” Neil Campling, analyst at Mirabaud said. “Without those they have no business.” For Germany, the affair represents an embarrassment. While the country has seen the likes of airline Air Berlin and renewable-energy firm Solarworld file for insolvency in past years, critics say that Wirecard’s troubles could have been spotted earlier. The crisis began when Wirecard failed to publish its yearly report on June 18, citing the missing cash. In the ensuing days, Wirecard’s stock and bonds collapsed after two Asian banks that were alleged to be holding the funds denied any business relationship with the company. Braun resigned on June 19, and was arrested by Munich prosecutors a couple of days later. He’s been since released on bail. Nick Note: I remember the hell they put us through when Braun (our account manager) informed us he did not like our “business model” after we disclosed Deutch banks missing capital and screamed about the shit at Well FAR GOES you money BANK (which i still maintain is insolvent!  He told us they are going public and want to “clean up” their clients. He further went on to say “they” did not like our “business model which as you know is revealing the shit the bankers and brokers pull ” which has been in existence online for over 20 years. He went on to tell us that their new friends the bankers like Deutch bank are going to take them into the big leagues. I warned him at the time that they will end up “fucking you in the ass” It took years to get our high  6 figure deposit back from them and in the end the chicken shit asshole shorted us. We were at one time one of their biggest clients. That is why he personally handled our account. He was quick to call for FREE advise. Now he is paying the price  for throwing us under the bus and selling out to the banker assholes. He got to big for his britches and he will spend the rest of his life in a cold dang German jail…..