Wirecard has filed for insolvency only a week after it revealed that €1.9bn (£1.7bn) had gone missing from its accounts, after blaming “possibly fraudulent” transactions for the lost funds.
The firm is the first DAX member to collapse into insolvency, leaving creditors owed €3.5bn (£3.1bn), according to Reuters.
Last week, the Munich-based group was forced to postpone the publication of its financial results for the fourth time this year, after EY, its auditor, refused to sign off its accounts in light of the missing funds.
According to Wirecard, EY informed the group that “no sufficient audit evidence” could be obtained of the missing £1.7bn figure which accounts for approximately a quarter of its consolidated balance sheet total.
Following the scandal, former CEO Markus Braun was arrested by German authorities last Tuesday (23 June) on charges of inflating the company’s balance sheet.
On the same day, the company said it was likely that the missing funds did not exist, however.
In a statement, the group said: “The management board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of €1.9bn do not exist.
“The company previously assumed that these trust accounts have been established for the benefit of the company in connection with the so called Third Party Acquiring business and has reported them as an asset in its financial accounts. The foregoing also causes the company to question the previous assumptions regarding the reliability of the trustee relationships.”
Prosecutors said that Braun turned himself in on Monday evening and would be brought in front of an investigating judge who would then decide whether he should remain in custody. He has been released on €5m (£4.4m) bail.