Wirecard lets 730 employees go, more than half its workforce
Wirecard, the German payments company which slipped into insolvency two months ago, has terminated 730 of its employees, along with remaining board members.
These terminations, which account for more than half of its staff, affect its core business and its subsidiaries. About 570 employees, including 350 at Wirecard’s insolvent subsidiaries, will remain in employment.
The Munich court opened insolvency proceedings on 25 August. Lawyer Michael Jaffe is the permanent administrator.
Jaffe previously handled the bankruptcy of container investment giant, P&R. At the time, P&R’s fall from grace was dubbed one of the largest investment frauds in German history.
Late night email
At 19:30pm on 24 August, a number of employees received emails from Wirecard’s management notifying them of employment termination.
It’s unclear how many of the 730 employees terminated received this email. First reported by Finance Forward, the email suggests axed employees may not receive bankruptcy payments for August.
Entitled “Exemption from the duty to perform work”, it reads: “Continuing payment of your remuneration for the period from August 25, 2020 is not possible at the expense of the bankruptcy estate.”
“I think it’s shoddy to send an email like this in the evening without warning,” union secretary at Verdi, Kevin Voss, tells Finance Forward.
Jaffe’s assessment of Wirecard
After the emergence of a €1.9 billion hole in Wirecard’s accounts earlier this year, former executives hit headlines. Prosecutors alleged they knew about big losses as early as 2015.
Prosecutors also say these executives conspired to obtain billions of euros in fraudulent loans to inflate the books with fake assets. These events are what has led to Wirecard’s insolvency proceedings.
“The economic situation of Wirecard AG was and is extremely difficult in light of the lack of liquidity and the well-known scandalous circumstances,” Jaffe says in the statement.
“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.”
What’s happening to Wirecard’s businesses?
With the exception of Wirecard’s bank, all its companies have filed for bankruptcy. “Many of the subsidiaries have no assets, even the office plants were leased,” one employee tells Finance Forward.
The German fintech has started to offload assets in order to pay creditors. It has agreed to sell its Brazilian business to a subsidiary of PagSeguro Digital.
Its UK business has reached an agreement in – principle – to sell some assets to Railsbank. The administrator has also said the sales process for Wirecard North America is in advanced stages.
The first creditors’ meeting will take place on 18 November.
Read next: Wirecard sells assets in Brazil to PagSeguro