Wirecard Cash Crunch Hits Staff as Insolvency Holds Up Pay
(Bloomberg) -- Wirecard AG employees in Germany haven’t yet received their June paychecks after a financial scandal led to the company’s insolvency, people familiar with the matter said.
The salaries were due on Friday, the people said, asking not to be identified because they aren’t authorized to speak to the media. Wirecard has about 5,800 employees, according to the company’s website. A representative for the company declined to comment.
A Munich court on Monday appointed a preliminary administrator for the company after it filed for insolvency last week. From noon on Tuesday, company payouts including salaries require sign-off by the administrator. Employees who don’t get paid as a result can file a compensation claim with the labor administration once the insolvency proceedings have been opened.
The Financial Times previously reported that June salaries had been suspended in Germany and other regions.
Wirecard filed for insolvency last week and law enforcement agencies have issued arrest warrants against executives including ex-Chief Executive Officer Markus Braun. The company said that 1.9 billion euros ($2.1 billion) was missing and probably never existed. The share price has collapsed by about 95% since the missing money was disclosed two weeks ago.
Wirecard rapidly drew down its credit lines ahead of the scandal, Bloomberg reported previously. It owes about 1.6 billion euros to a consortium of 15 banks, people familiar with the matter have said.
The U.K. Financial Conduct Authority said Tuesday that it has been working closely with Wirecard’s U.K. unit and is now in a position to allow the company to resume operations, after freezing customer accounts.
The fallout is shaking up Germany’s financial landscape. Frankfurt stock exchange operator Deutsche Boerse AG is also planning changes to rules for its benchmark index and lawmakers are moving to overhaul the regulation of financial companies.
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