Liquidation processes are being further progressed
- Business operations to be continued – Resizing of existing structures necessary – Reorganization of sustainable areas
On August 25, 2020, the Local Court of Munich opened insolvency proceedings regarding the assets of Wirecard AG and six other German Wirecard companies and appointed Dr. jur Michael Jaffé of the law firm JAFFÉ Rechtsanwälte as insolvency administrator. As a result, the power of disposal over the assets of the insolvent companies is transferred to the insolvency administrator.
This also marks the end of the insolvency payment period meaning Wirecard AG and the other insolvent companies will have to generate and pay their own wages and salaries again from this date. At the time of filing for insolvency at the end of June 2020, no liquidity was available for this purpose. Under the preliminary insolvency administration, it has since been possible to stabilize the ongoing business and create a basis for its continuation.
However, with the opening of the insolvency proceedings, the existing structures will have to be resized. The cash burn rate at the time of filing for insolvency was enormous, so that urgent action is needed. The company had stacked up resources for a supposed growth and had created considerable overcapacities by acquiring numerous companies whose integration had not or only slowly been pursued. These factors led to high losses and to a significant disproportion between the available resources and those actually required on the group level.
Against this background, far-reaching cuts are therefore necessary in order to make any kind of continuation possible and to maintain the option of exploiting Wirecard AG’s core business, the so-called acquiring and issuing business. As a result, terminations need to be made both with regard to the infrastructure (real estate rental and leasing contracts) and for around 730 employees. As a result however, 570 members of staff (350 thereof in the insolvent entities and 220 in the solvent Wirecard Bank AG) are able to remain in employment in Aschheim. The Management Board contracts will also be terminated due to insolvency.
“The economic situation of Wirecard AG was and is extremely difficult in light of the lack of liquidity and the well-known scandalous circumstances. The usual restructuring and cost-adjustment measures are therefore not sufficient, as such a massive loss situation is not feasible at full cost in the insolvency proceedings. Accordingly, the number of employees and all other cost positions at all insolvent companies have to be adjusted to the corporate reality. In the sales process for the core business, which also includes the solvent Wirecard Bank AG, we are currently in negotiations with several well-known interested parties regarding an acquisition. The proceeds from the sale will benefit the creditors,” emphasized insolvency administrator Dr. Michael Jaffé.
In addition, the investor processes for the independent international affiliates are moving quickly. A few days ago, an agreement on the sale of Wirecard Brazil S.A. was signed. The sales process for the subsidiary Wirecard North America Inc. is also well advanced. The liquidation processes for the other Wirecard affiliates worldwide are also making progress.
Examination of damage claims – creditors meeting on November 18, 2020
Parallel to the liquidation processes, the events that led to the insolvency are also being investigated. However, in view of the enormous volume of data and payment transactions to be checked, the examination of any liability claims resulting from unauthorized actions or breaches of duty will take some time. All promising and recoverable claims for damages will be pursued by the insolvency administrator.
On November 18, 2020, the first creditors’ meeting, the so-called report meeting, will take place. As things currently stand, this first creditors’ meeting is to take place in person in the Löwenbräukeller in Munich. However, due to Covid-19 hygiene regulations, the number of participants will be limited, according to the guidelines of the Bavarian government. The report meeting is not public and is therefore only open to the insolvency creditors. Nonetheless, these creditors can also provide written authorization for a representative to attend. However, only one authorized representative per creditor is admitted if other creditors would otherwise not be able to attend. The participation of the creditors is not mandatory. The insolvency administrator will provide the creditors with a written report, which will also be available in the creditor information system.
With the opening of the insolvency proceedings, the creditors of Wirecard AG as well as of the insolvent Wirecard Technologies GmbH, Wirecard Issuing Technologies GmbH, Wirecard Service Technologies GmbH, Wirecard Acceptance Technologies GmbH, Wirecard Sales International Holding GmbH and Wirecard Global Sales GmbH can now also file their claims for the insolvency table in the respective proceedings with the insolvency administrator. The competent Munich Local Court set a deadline for this purpose of 26.10.2020. The insolvency administrator will send the known creditors a form for filing their claims. It is also available for download at www.jaffe-rae.de.
Press contact for the insolvency administrator
Sebastian Brunner
Tel.: +49175/5604673
E-Mail: sebastian.brunner@brunner-communications.de
