Wirecard AG’s insolvency is inflicting pain on some banks who lent to the once-highflying, now-insolvent German fintech, the Wall Street Journal reported. Some of Europe’s largest lenders anticipate recovering as little as 20 percent of the almost $2 billion they are owed. Meanwhile some banks seeking an exit from their portion of the loan are challenged to find buyers at cents on the euro even as Wirecard’s insolvency administrator seeks to sell the company’s assets to pay off debt. Those struggles underscore expectations among some investors, investment bankers and restructuring experts that Wirecard’s lenders and other creditors are unlikely to recoup much of what they are owed. Fraud allegations against Wirecard over its accounting will push potential buyers to comb through the company’s books to evaluate the businesses. But that takes time, raising the risk of Wirecard customers flocking to rivals and further undermining any effort to realize value from asset sales. Wirecard’s debt load includes a €1.75 billion ($2 billion) revolving credit facility. Lloyds Banking Group PLC is one of the 15 lenders to that facility. It is owed around €120 million, yet sold the holding recently at around 18 cents on the euro to distressed debt hedge funds, according to the people and others familiar with the transaction. The move suggests the bank didn’t expect insolvency proceedings to generate much value for stakeholders.
