Electronic payment systems company Wirecard has filed for insolvency after admitting to falsifying its accounts and failing to submit a signed balance. "Wirecard's board of directors has decided today to present a request to open insolvency proceedings in the Munich court of first instance and instruction competent for the threat of insolvency and over indebtedness," the company announced in a statement on Thursday.
Trading in Wirecard shares, which were down 12.7% before insolvency was known, was interrupted for a few moments on the Frankfurt Stock Exchange. When trading resumed, they fell to 80% and stood at 2.5 euros.
The Munich Public Prosecutor's Office accuses the firm of inflating its turnover and balance sheet with simulated revenue and market manipulation.
Wirecard, which acknowledged that the 1.9 billion euros in two trust accounts in the Philippines are likely to be missing, is also studying whether to file insolvency for its subsidiaries.
The German company should have presented the final balance of 2019 last week, but it did not do so because the EY auditor refused to sign it due to doubts about the existence of banking assets in fiduciary accounts in Asia worth 1.9 billion euros, over the ones with not enough checks.
Since then Wirecard, which seemed to be a very successful technology company and came to replace Commerzbank in the Frankfurt selective in September 2018, has lost 98% of its market value.
The company was accused of accounting irregularities in Asia and money laundering in early 2019 by the British newspaper Financial Times .
Wealth manager DWS of Deutsche Bank has steadily reduced its fiduciary position in Wirecard in recent months and is studying legal action against the company.
Union Investment, which was also one of Wirecard's largest shareholders, has sold the majority of its shares and is also considering taking legal action.
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