Wirecard’s administrator has cancelled the contracts of its chief executive and two other senior managers while cutting 730 staff at the collapsed German payment company’s headquarters in Bavaria.
The moves follow the formal decision by a Munich court on Tuesday to kick off the insolvency proceedings for seven Wirecard subsidiaries and officially transfer decision-making powers away from the company’s directors and executives to the administrator.
Wirecard, which was worth as much as €24bn at its height, collapsed into insolvency in June after the revelation of one of postwar Germany’s largest ever accounting frauds, including the discovery that about €1.9bn in cash was missing from its accounts.
Munich-based lawyer Michael Jaffé was appointed interim administrator at the start of July and has been working since then on preparing the company to be dismantled and sold.
“The economic situation of Wirecard AG was and is extremely difficult in light of the lack of liquidity and the well-known scandalous circumstances,” said Mr Jaffé in a statement on Tuesday.
“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.”
Hundreds of Wirecard’s employees at its base in Aschheim, near Munich in southern Germany, were informed by email on Monday night that they would be “irrevocably released” from their contracts on Tuesday.
The administrator said “far-reaching cuts” were necessary to “make any kind of continuation possible”. It plans to reduce staff numbers at its Aschheim office from 1,300 to 570, of which 220 will be in its Wirecard Bank subsidiary that is not part of the insolvency.
The administrator said: “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 unauthorised actions or breaches of duty will take some time.”
The Wirecard creditors are due to hold their first meeting to discuss the administrator’s findings on November 18 at Munich’s Löwenbräu brewery.
Wirecard’s management team has already been turned upside down by the scandal. Markus Braun, its former chief executive, and three other former top managers are in custody. Mr Braun denies allegations of fraud and embezzlement. Jan Marsalek, Wirecard’s former second-in command, is on the run and wanted by police.
The administrator said the contracts of the three remaining members of the executive team “will also be terminated due to insolvency”. James Freis was only recently hired from Deutsche Börse to become Wirecard’s chief compliance officer in July, but after the scandal erupted he was chosen as an emergency replacement for Mr Braun as chief executive on June 19.
The other two members of the management board have been at Wirecard much longer. Alexander von Knoop joined the company in 2005 and was made chief financial officer in 2018. Susanne Steidl joined in 2006 and has been chief product officer since 2018.
Thomas Eichelmann, who joined the Wirecard board last year and took over as chairman at the start of this year, is expected to announce shortly that the five-person supervisory board has resigned, according to two people briefed on the matter.
Last week, Wirecard’s UK business agreed to sell much of its technology, staff and clients to Railsbank, a UK start-up backed by Visa. The administrator has also agreed to sell the payment company’s Brazilian offshoot and it expects to receive final bids shortly for Wirecard North America, formerly Citigroup’s Prepaid Card Services business.