Spanish technology company Gowex has filed for bankruptcy protection, after its chairman admitted falsifying accounts and resigned.
In a statement filed with Spain’s small cap alternative stock market the Mercado Alternativo Bursátil (MAB) on Sunday, Gowex stated that chairman and chief executive (CEO) Jenaro García met with directors at the weekend and acknowledged that accounting statements for at least the past four years didn’t reflect a ‘faithful image’ of the company’s performance.
The statement said the board revoked García’s management authority and then accepted his resignation. The statement said the company started bankruptcy proceedings “under the expectation that the company can’t meet its current liabilities.”
Until late last month Gowex, which provides free Internet hot spots in cities worldwide, had been a star performer on Spain’s junior market. However, on 1 July investment company Gotham City Research issued a report saying the company was ‘too good to be true.’
The report questioned how the company’s low-margin business could generate the €182.6m (US$248.2m) in revenue reported by Gowex in 2013, suggesting that 90% of it was non-existent.
Gowex shares promptly crashed, losing most of their market value. García initially denied the charges and accused Gotham of trying to benefit through a short-selling strategy. In a disclaimer accompanying its Gowex report, Gotham acknowledged that it “stands to profit in the event the issuer’s stock declines.” Nonetheless, trading in the shares was halted two days after the report appeared, pending the CEO’s meeting with board members.
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