Wirecard Reports on a Sudden Hole

Annabella Cornelly

Commerce platforms that we employ nowadays help us resolve many issues related to payments and banking. Digital finance is something common and many people find this service of great use while performing their daily routines. Digital payments keep developing – companies offer more advanced features and suggest trying out special tools and instruments not available a year ago.

Modern platforms have become more progressive and their efficiency has increased. One of such platforms is Wirecard that has recently announced that the team is ready to file for insolvency. The reason is a huge hole in its balance sheet that is equal to two billion USD. This wipes out thirty-two percent of the supposed assets belonging to the corporation. The brand issued some of the most commonly used debit cards. The list includes Cryptopay and TenX, which are widely used in many countries.

Trouble debit cards ruin any company’s reputation – this issue is not frequent, yet it happens from time to time and this may bother customers who rely on the system. Wirecard now seems to be one of such troubled fintech sectors. This company powers several famous and popular debit cards servicing crypto customers. The crypto market has recently noted that the developer has filed to open proceedings linked to insolvency.

Many leading mass media outlets took this news very seriously – dozens of reports mention the news and one can find plenty of information about the latest event on numerous forums. The brand filed an application and the documents reached Munich district court – that’s the institution ready to initiate the procedures to resolve insolvency. The official representatives of the brand admitted that there is over-indebtedness that they need to declare. Also, the company made a statement regarding impending insolvency, which, in turn, triggered the filing process. Some experts cannot avoid mentioning the two-billion-USD hole they detected in its balance sheet – the sum went missing and the court is to find out how this all occurred.

Events didn’t keep the brand waiting for too long – the case unfolded quite promptly because finding out that thirty-two percent of its balance sheet, according to the team, never existed. The company soon lost all of its leaders and founders – many of the executives chose to resign. The authorities arrested the official representatives of the firm, too.

Insolvency Does Not Equal Bankruptcy

Insolvency is different from bankruptcy. The former implies that the corporation cannot meet its debts and cannot resolve the issue in the short term. Reasons may vary from a negative cash flow to an insufficient balance of the asset. The company performed a financial filing two years ago, but since then has managed to reach an income of three hundred and fifty USD. However, these figures look suspicious to many investors and they intend to look into the papers deeper.

Procedures that insolvency involves mean that firms will employ drastic measures. This may be necessary to do to help the brand stay afloat. In these instances, many owners decide to cut expenses. Some reduce staff and restructure debts. Others find it effective to sell assets and other property.

Bankruptcy, on the other hand, means that the owner cannot pay debts - it indicates a complete failure of the business. Both of these problems ruin the company’s reputation – it looks and feels less reliable and trustworthy to customers and investors.