ATHENS – The founders and leaders of embattled Greek jewelry and accessory maker resigned after an audit found discrepancies of $1.29 billion in cash reserves, including $1 billion in Asian sales, raising prospects the company would shut and not go into bankruptcy and try to re-emerge.

The financial hole was bigger than the most pessimistic estimates, including those by hedge fund QCM, which brought the case to light last May.

This was the outcome of the preliminary report by Alvarez & Marsal that collected the data from Folli Follie’s activity in Asia, said Kathimerin. The company’s founders and leading executives Ekaterini and Dimitris Koutsolioutsos stepped down.

Alvarez & Marsal also found big losses instead of profits, cash reserves that were far below those declared, smaller requirements than those announced in the group’s financial reports and double the obligations.

With key financial and legal advisers to Folli Follie previously resigning, it grew increasingly unlikely a bankruptcy plan would be viable and if the company could have a plan or an investor by Nov. 12, when its application for protection from creditors is to be examined.

Without bankruptcy and protection from creditors who were misled about the state of the company’s finances, they could demand immediate shutdown and liquidation of assets to pay them although there’s no report where the apparently missing money went or if anyone would e prosecuted.

The report showed that the group’s sales last year were less than half of the declared 1.42 billion euros ($1.65 billion,) as some 850 million euros ($986.36 million) of the volume in Asia is missing, the paper said.

Out of the 446.34 million euros ($517.94 million) declared in cash reserves, 252 million euros ($292.43 million) is missing too. Given that the group’s loans add up to 612.6 million ($710.88 million,) they exceed the actual sales of 570 million euros ($661.44 million) although it wasn’t said how that could happen.

Follie Follie was earlier suspended from the Athens Stock Exchange. During an investigation by the Capital Market Commission that led to the imposition of a 4 million-euro fine on the group, Folli Follie failed to present documents confirming the whereabouts of some 242.5 million euros ($282.62 million) of total available cash.
“It will be hard for any investor or creditor to accept a solution for the future of Folli Follie that will include in its management anyone with the Koutsolioutsos surname,” the paper said without identifying the source, adding that credit market officials agree.

Folli Follie blamed its problems on what it said it was because of a “coordinated dissemination of misleading news” regarding the company, with very negative impressions created, the paper had said.