Wirecard bankruptcy administrator noted in his report that the company is able to pay off only 1% of its debt to creditors.
Wirecard bankruptcy administrator Michael Jaffe has filed an insolvency report for the German fintech company in the Munich District Court. According to the Handelsblatt newspaper, Wirecard owes its creditors € 3.2 billion, but it has only € 26 million in its accounts.
In his report, Jaffe displays a truly frightening picture: Wirecard has virtually no cash of its own, no short-term assets, and no receivables to sell. The market capitalization of the company was estimated before € 24 billion. It’s shocking to reveal that a famous global corporation has only € 26 million in its bank accounts.
Wirecard’s liquidity gap reaches 99%, which means that only 1% of the debt can be repaid by the company. Moreover, Jaffe estimated Wirecard’s assets at € 422 million. It turns out that, at best, the company’s balance sheet deficit will be € 2.8 billion.
Jaffe came to an unequivocal conclusion: Wirecard bankruptcy cannot be avoided due to excessive debt and insolvency. Therefore, there is no business restructuring plan.
Jaffe paid special attention to the “organizational chaos” that reigns within the company.
Wirecard initiated bankruptcy proceedings after auditors from E&Y were unable to confirm € 1.9 billion on its balance sheet. In the incident, which invoked interest not only of the prosecutor’s office, but of the European supervisory authorities, taking into account that even state regulators – BaFin and the Bundesbank were involved into it.
Financial scandal of the century in Germany
Payment system operator Wirecard has falsified its records for years. Rumors about this have been around for a long time, but truth was revealed only in the summer of 2020. This is the story of a big deception.
There are certainly examples of fraud and bankruptcy in the history of German business, but the Wirecard collapse is unique. The financial concern, which is included in the leading DAX stock exchange index of the 30 most expensive companies in Germany, left the company’s shareholders with nothing in a matter of days in June 2020.
The unprecedented transformation of the German blue chip, the value of which exceeded 22 billion euros on the stock exchange, into a dummy – how could this have happened? The signals of the company’s fraud have been ignored for too long by authorities, auditors and regulators.
As investigation continues, more incredible details of this scandal arise.