FRANKFURT/MUNICH (Reuters) – Wirecard collapsed on Thursday owing creditors almost $4 billion after disclosing a gaping hole in its books in Germany’s worst accounting scandal.
The payments company filed for insolvency at a Munich court saying that with 1.3 billion euros ($1.5 billion) of loans due at the end of the month its survival as a going concern was “not assured”.
Its implosion came a week after EY, its auditor for over a decade, refused to sign off the 2019 accounts, forcing out Chief Executive Markus Braun and leading Wirecard to admit that $2.1 billion of its cash probably didn’t exist.
EY said it had no immediate comment.
Wirecard is the first member of Germany’s prestigious DAX stock index to go bust, barely two years after winning a spot among the country’s biggest 30 listed companies with a market valuation of $28 billion.
Creditors have scant hope of getting back the 3.5 billion euros they are owed, sources familiar with the matter said. Of that total, Wirecard has borrowed 1.75 billion from 15 banks and issued 500 million in bonds.
“The money’s gone,” said one banker. “We may recoup a few euros in a couple of years but will write off the loan now.”