Wirecard’s Australian and New Zealand businesses were officially placed in voluntary administration yesterday afternoon.
Around 70 local and Kiwi staff were notified of the decision following the appointment of Andrew Fielding and Nicholas Martin from BDO Business Restructuring as administrators of the Australian operation.
Melbourne staff were told that BDO would make an assessment on whether the business was viable and would try to identify potential buyers.
Wirecard AG, a German-listed global payments company filed for insolvency last month after special audits of its latest financial report found that €2 billion of cash could not be accounted for.
That revelation resulted in the arrest of several former directors of the group, including the former chief executive, Markus Braun.
The collapse of the Australian and NZ subsidiaries comes after Banking Day revealed on 26 June that the local entities continued to trade in the last 12 months only with financial support from their German-owned parent companies.
According to the latest accounts filed with ASIC, Wirecard Australia A&I Pty Ltd was balance sheet insolvent at the end of December last year, with net liabilities of $4.3 million.
This business, which recently launched a prepaid Visa card in partnership with STA Travel, appears to have received a $10 million lifeline from its German parent in May that allowed it to stay in business.
Wirecard NZ Limited has also been losing money and reported net liabilities of $NZ 3.5 million at the end of 2018.
It continued to trade because its German parent agreed to pump additional capital into the business last year.
A raft of Australian banks including Bendigo Bank, ME Bank and Cuscal, use a Wirecard-owned software platform known as Cadencie to manage parts of their credit and debit card operations.
Cadencie is also used by more than 20 other banks throughout Asia and the Middle East.
These banks could soon be forced to acquire the business and restructure it as a utility if a buyer for the Cadencie technology cannot be found.
Wirecard also owns Finsim-branded products that provide anti-fraud and anti-money laundering software services to several of the major banks including Westpac.
However, the sale of any part of Wirecard’s Australia operation could be complicated by the fact that the company is being sued by a former Sydney client for alleged misleading or deceptive conduct under NSW fair trading laws.
In a statement of claim lodged with the Supreme Court of New South Wales in April, Finstro Holdings says that Wirecard Australia failed to deliver it access to Cuscal services that would have enabled it to launch a prepaid scheme debit card.
Finstro claims that it was misled by Wirecard into believing that the German-owned subsidiary could help it launch the card product by March 2019.
Wirecard Australia is defending the claim, saying in court documents that Finstro was not able to issue a prepaid card because it did not hold a financial services licence.