Wirecard’s Dismantling Begins With Sale Of Brazillian Operation

Fallen German Fintech Wirecard’s dismantling is well underway with the sale of its Brazillian operations to Sao Paulo-based PagSeuro Digital. A New York listed competitor, PagSeguro Digital is one of Brazil’s largest mobile payment-based eCommerce companies. This is the first asset of global operations to be successfully sold off following the payments company’s collapse due to a fraud scandal in June.

Commenting on the sale, court-appointed insolvency administrator Michael Jaffé noted last Friday that “it is particularly pleasing that the sale of Wirecard Brazil has been the first success with respect to the sale of assets, because the framework conditions of the Wirecard insolvency proceedings have been, and still are, very difficult.” He went on to reveal that the sale of some portion of the company are underway in Britain, with a North American deal likely to come soon.

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Having only joined Germany’s prestigious blue-chip DAX index around 2 years ago, Wirecard was kicked off on Monday. Formerly a rising star of German fintech, Wirecard’s spectacular fall came after persistent reports of accounting irregularities (including by the Financial Times) caused the company to eventually admit that $2 billion was missing from its balance sheet. Following the admission, its shares plummeted 99%, forcing the company to file for insolvency. Wirecard currently owes creditors $4.71 billion, a sum the administrators are hoping to recover from the sale of its parts.

On Tuesday, administrators shared that the insolvent company has terminated its entire board of management, and will lay off more than half of its 1,300 German employees. “The number of employees and all other costs positions at all insolvent companies have to be adjusted to the corporate reality.” This news comes amid the opening of insolvency proceedings over Wirecard’s assets by a Munich court.

The FT has reported that Wirecard is in talks to sell its customers, some staff, and its payment card technology to Railsbank, a UK start-up backed by Visa. The disgraced company would need written consent from the Financial Conduct Authority to sell its UK operations. So far, it isn’t clear whether they’ve received permission. Railsbank is yet to comment on the terms of the deal.

The price of PagSeuro’s acquisition of Wirecard Brazil has not been disclosed.