German payments firm Wirecard files for insolvency after revealing $2 billion accounting black hole

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German payments firm Wirecard files for insolvency after revealing $2 billion accounting black hole

An illuminated logo sits on the exterior of Wirecard's headquarters in the Aschheim district of Munich, Germany.Michaela Handrek-Rehle | Bloomberg

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An illuminated logo sits on the exterior of Wirecard’s headquarters in the Aschheim district of Munich, Germany.

Michaela Handrek-Rehle | Bloomberg | Getty Images

Wirecard will file for an application to open insolvency proceedings with the district court of Munich, the company said Thursday.

The company said in a short statement that management had decided to open the proceedings “due to impending insolvency and over-indebtedness.”

It marks a dramatic fall for the Wirecard, once a high-flying tech darling in Germany, after the company revealed that 1.9 billion euros ($2.1 billion) of cash on its balance sheet had gone missing.

A further admission on Monday that the cash likely did not exist further compounded Wirecard’s troubles, with the firm attempting to reach a deal with creditors on a financing lifeline.

The accounting irregularities, first uncovered by the Financial Times in an investigation last year, have also threatened to tarnish the reputation of Germany’s financial regulator, BaFin.

Wirecard said it was also evaluating whether insolvency applications would have to be filed for its subsidiaries. The company controls a bank in Munich as well as a card-issuing unit in the U.K.

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