Wirecard is filing for insolvency, days after revealing a gaping €1.9 billion hole in its accounts.
The German arm of the firm has opened proceedings at a district court in Munich, citing "impending insolvency and over-indebtedness".
It is currently evaluating whether insolvency applications have to be filed for subsidiaries of the wider Wirecard Group.
It is the latest twist of the knife for the rapidly unravelling German payment processor, which saw its CEO Markus Braun placed under arrest in Munich on Monday on suspicion of inflating the firm's balance sheet and sales through fake transactions.
Braun, who denies the allegations, has since been released on EUR5 million bail terms.
Wirecard's shares have tanked as mounting accounting irregularities have come to light at the former hot tech German startup, which on Friday called in investment bank Houlihan Lokey to evaluate its options.
The firm currently owes a consortium of banks €2bn, and has a further €1.4bn of debt outstanding.
Trading in Wirecard's shares was suspended just prior to the announcement.
In a statement, the firm says: "Wirecard AG has conducted negotiations with the lending institutions, taking into account recent developments. In the absence of an agreement with the lenders, there was a likelihood of termination and expiry of loans with a volume of EUR 800 million on June 30, 2020, and EUR 500 million on July 1, 2020.
"The Management Board has come to the conclusion that a positive going concern forecast cannot be made in the short time available. Thus, the company's ability to continue as a going concern is not assured."
The company has also relinquished control of funds at it banking unit to German regulator BaFin to prevent the cash being used to plug holes elsewhere in the company.