BERLIN: Wirecard, the German scandal-hit payments company, said on Saturday it would proceed with business activities after filing for insolvency and expects a provisional administrator to be appointed by judicial authorities shortly.

“The management board is of the opinion that continuation is in the best interests of the creditors,” it said in a statement. “Whether insolvency proceedings will be opened is still under review.” Wirecard collapsed on Thursday owing creditors almost $4 billion after disclosing a hole in its books that its auditor EY said was the result of a sophisticated global fraud.

The insolvency filing did not include the company’s Wirecard Bank unit, which holds an estimated 1.4bn euros ($1.57bn) in deposits and is already under emergency management by BaFin, the German banking regulator.

“It is being continuously reviewed whether insolvency applications also have to be filed for subsidiaries of the Wirecard Group,” the statement said. “With the exception of a small development branch office, no insolvency applications have been filed by Group companies at present.” The company said its bank would continue to carry out payments to merchants and that it was in contact with regulators and credit card companies.

Britain’s Financial Conduct Authority (FCA) has imposed a number of requirements on Wirecard, including not to dispose of any assets or funds, and not carry out any regulated activities.

The company said it was in talks with the FCA about its Wirecard Card Solutions Ltd unit and was hopeful that it will implement measures that allow it to resume operations.

The European Union is investigating BaFin over the collapse of Wirecard, a rare measure that heaps embarrassment on Germany days before it is due to take over the EU’s rotating presidency.

Investors want to know why EY did not spot problems in Wirecard’s finances earlier.

Published in Dawn, June 28th, 2020