The sudden collapse of Wirecard has made it to the headlines, the payment giant owes almost USD 4 billion to the creditors. This is claimed to be Germany’s worst accounting scandal by market experts.
According to trustworthy reports, the company filed for insolvency at a Munich court, stating that with €1.3 billion of loans that are due at the month end, the concern of its survival was “not assured”.
As per the credible sources, the breakdown came a week after auditor EY denied signing off its 2019 accounts, which forced out the Chief Executive Markus Braun and made Wirecard to accept that the cash worth US$2.1 billion probably did not exist.
EY stated that there are clear indications that Wirecard was involved in a fraud with several parties across the globe in different institutions.
Wirecard reportedly borrowed an amount of €1.75 billion from fifteen banks which includes ABN Amro, Commerzbank, LBBW, and ING and €500 million from bond investors. The creditors are left with a little hope of getting back the €3.5 billion owed.
Schirp & Partner- a German law firm stated that now as Wirecard is effectively sidelined, it will file a case against EY on behalf of the bondholders and shareholders.
A trusted source that is in close talks with the creditors said that even though the company had a healthy core, almost two-thirds of sales had been faked in its accounts.
Wirecard shares, that were suspended after the announcement, dropped down by 80 per cent when trading resumed. After EY questioned its accounts, the shares have lost 98 per cent.