Wirecard files for insolvency after a devastating scandal that saw $2 billion go missing and its ex-CEO get arrested

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  • Wirecard, a once valuable German fintech firm, filed for insolvency on Thursday as it battles a huge accounting scandal.
  • Auditors said last week that more than $2 billion went missing from the company's balance sheet, and Wirecard later said the money likely never existed.
  • Wirecard said on Thursday that it applied to begin insolvency proceedings in the Munich district court.
  • On Monday, its former CEO was arrested on charges related to market manipulation and false accounting.
  • Visit Business Insider's homepage for more stories.

The German fintech group Wirecard AG filed for insolvency on Thursday, less than a week after CEO Markus Braun resigned and was arrested on charges related to market manipulation and false accounting.

It is the first member of Germany's prestigious blue-chip DAX index to file for insolvency.

The payments processor said on Thursday that it had applied to open insolvency proceedings in the Munich district court "due to impending insolvency and over-indebtedness."Advertisement

It also said it was evaluating whether insolvency applications would have to be filed for its subsidiaries.

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Wirecard's shares were suspended from trading before its announcement.
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Ordinarily, a company files for insolvency when it fails to meet its financial obligations to lenders when debt payments are due.

In Germany, an insolvency administrator has the option to continue the business as long there is hope of finding an investor that will acquire it. Wirecard's shares have fallen by about 90% since its auditor said last week that €1.9 billion, or about $2 billion, had gone missing from its balance sheet. Wirecard later said the money likely never existed.Advertisement

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Braun was released on €5 million bail on Tuesday, though the German police are still investigating. The Munich prosecutor's office said it would "now look at all possible criminal offences," Reuters reported.Advertisement

Here's how Wirecard went from analyst darling to a $2.2 billion accounting scandal — and cost SoftBank hundreds of millions in the process »

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