German payments company Wirecard has collapsed amid $4 billion U.S. of debt owed to its creditors.
The implosion of the fintech company comes less than two years after it won admission to Germany’s prestigious DAX stock index. Worth $28 billion at its peak, Wirecard is the first DAX company to go out of business.
Shares of Wirecard plunged 80% to their lowest since January 2006 after the company said it was filing for bankruptcy protection. Wirecard’s demise leaves creditors owed 3.5 billion euros ($3.9 billion U.S.). Of that amount, the company had borrowed 1.75 billion euros from 15 banks and 500 million euros from bond investors.
Shares of Wirecard were suspended for 60 minutes by the Frankfurt Stock Exchange before the announcement on Thursday. Wirecard shares have now lost 98% of their value since auditor Ernst & Young refused to sign the 2019 accounts last week, forcing out long-time Chief Executive Officer Markus Braun.
Wirecard said in a two-paragraph statement that its new management had decided to apply for insolvency in a Munich court due to "over-indebtedness". The Munich prosecutor’s office, which is investigating Braun on suspicion of misrepresenting Wirecard’s accounts, said: "We will now look at all possible criminal offences."
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