26th June 2020

Wirecard to file an application for the opening of insolvency proceedings
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The Management Board of Wirecard has decided to file an application for the opening of insolvency proceedings on behalf of Wirecard AG at the competent Munich Local Court due to the threat of insolvency and over-indebtedness. It is being examined whether insolvency applications must also be filed for subsidiaries of the Wirecard Group.

Wirecard AG in the normal course of business has drawn upon credit from financial institutions. Wirecard AG has conducted negotiations with the lending institutions, taking into account recent developments. In the absence of an agreement with the lenders, there was a likelihood of termination and expiry of loans with a volume of E800m on 30th June 30, 2020, and E500m on 1st July 2020.

The Management Board has come to the conclusion that a positive going concern forecast cannot be made in the short time available. Thus, the company's ability to continue as a going concern is not assured.

Wirecard Bank AG is not part of the insolvency proceedings of Wirecard AG. BaFin has already appointed a special representative for Wirecard Bank AG. In future, the release processes for all payments of the bank will be located exclusively within the bank and no longer at Group level.

With this step, Wirecard AG wishes to protect the appropriate interests of all parties involved with the company, including creditors, customers and employees.

The company will continue to pursue possible chances of reorganisation in coordination with the temporary insolvency administrator to be appointed by the insolvency court.

Commenting on the collapse of Wirecard, Professor Kenneth Amaeshi, Chair in Business and Sustainable Development at University of Edinburgh Business School says the scandal is especially worrying because it happened within a country (Germany) renowned for its strong institutions-“Corporate scandals on the scale of Wirecard are usually the product of weak institutional contexts. Strikingly Germany has a reputation for possessing one of the strongest sets of safeguards against corporate malpractice in the world, along with Japan. Wirecard’s demise, when coupled with similar scandals in Japan in the last decade, suggests a worrying pattern; we may have to rethink our sense of the best methods of ensuring good corporate governance.
“Both Germany and Japan practice a form of capitalism often referred to as stakeholder capitalism, a system where companies are orientated to serve the interests of all their stakeholders rather than just their shareholders (unlike, for example, the US). Generally stakeholder capitalism is considered to go alongside a very strong regulatory framework and a long-term approach to business. Of the methods of organising the economy and policing corporate ethics it is the system thought least likely to fail in preventing the kind of activities Wirecard was engaging in.
“Curiously enough an accounting scandal similar to the one now engulfing Wirecard occurred in 2011 when the Japanese manufacturer of optical equipment Olympus fired its chief executive for whistleblowing. As with Wirecard today the scale of the corporate corruption exposed at Olympus suggested widespread failings in the Japanese system of corporate governance. Together the two scandals suggest stakeholder capitalism may not be so effective at preventing corporate malpractice as often believed.
“Academics and regulators should explore what happened at Wirecard very carefully, it is potentially highly significant for our understanding of which economic and regulatory models do best at preventing fraud and corporate malpractice.”