Wirecard submits an application for insolvency after the arrest of a former CEO in a scandal of 2 billion dollars

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The company’s digital payment stated Thursday in a press release that it had opened a judicial procedure to Munich ” because of the impending insolvency and over-indebtedness “. The company’s shares, which have lost 90% of their value in less than a week, have been suspended on the Frankfurt stock exchange.

Markus Braun, CEO technology of austria, who has built Wirecard (WCAGY) in one of the largest companies of Germany, was arrested earlier this week, suspected to have inflated artificially the balance sheet and the sales of the company through false transactions. Prosecutors have said that Braun had, perhaps, acted in cooperation with other authors.

Wirecard has acknowledged on Monday that 1.9 billion euros ($2.1 billion) of cash included in the financial statements – that is, about a quarter of its assets – had probably never existed in the first place. The company has removed its preliminary results for 2019, the first quarter of 2020, and its forecast of profits for the year 2020.

The scandal erupted last week when It said that its auditor, EY, could not locate the funds in the trust accounts and has refused to sign the financial results of the company. The fallout raises questions about the way in which the regulators and the auditors of the company may have missed the accounting irregularities that already compile to comparisons with Enron, the giant american energy, which filed for bankruptcy in 2001.

Braun suggested that It could itself be a victim of fraud. The lawyer for Braun did not respond to requests for comment.

– Stephanie Halasz contributed to reporting.

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