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The implosion of Wirecard AG in one of the biggest financial scandals in German corporate history leaves creditors who lent it as much as $3.6 billion wondering if they'll ever see their money again.

The company filed for court protection from creditors on last week and there's $2.13 billion missing from its balance sheet. Administrators face a long and complex task picking through the rubble of the first insolvency by a member of Germany's main stock index.

The insolvency court in Munich needs to formalize the process and appoint an administrator. While the exact timeline for this isn't clear, it could take days if not weeks given the complexity of the case. Wirecard is likely to fall under full court protection, which means the administrator it appoints will determine whether the business is viable or if it should seek to sell off the profitable parts and liquidate the rest. Creditors will then have to wait in line for a share of what proceeds remain from this process.

Wirecard owes its banks as much as $1.96 billion from a revolving credit facility and it sold $561 million of bonds to investment managers. The bondholders have prepared for the coming tussles with administrators by appointing One Square Advisors and law firm Kirkland & Ellis to advise them, while banks hired FTI Consulting and Allen & Overy.

But the creditors' position is weakened by the fact the debt is unsecured, or not backed by assets. That's because Wirecard had an investment-grade rating until the scandal erupted last week and creditors often only demand collateral on borrowers with junk ratings.

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The company's stock has fallen more than 95% over the past week, according to data compiled by Bloomberg.

Bondholders to Thomas Cook Group Plc were estimated to be in line to get as little as 2% of their money back after the U.K. travel group started its insolvency process last year. Banks faced a less bleak outlook, with recovery estimated at almost 17%. The liquidator said in March that creditor recovery could be zero.

The future of Wirecard's banking arm -- one of its most prized assets with deposits of $1.9 billion at the end of September -- is not included in the insolvency proceedings and as it falls under the jurisdiction of Germany's BaFin financial watchdog. The regulator is responsible for deciding whether the bank needs to file for insolvency as well but has less disruptive tools at its disposal to stabilize the unit. Under a deposit freeze, BaFin would be able to determine whether the bank is still financially healthy enough to resume operations.


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