US Banking-as-a-Service Platform Solid Filed For Bankruptcy
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Solid, a US-based Banking-as-a-Service (BaaS) platform, recently filed for Chapter 11 bankruptcy protection.
The company’s last valuation placed its worth at $33 million, which was after a Series B funding round that was led by FTV Capital in 2022. At the time, the round raised $63 million, and the company boasted of achieving 10x growth in revenue, transactions processed in the previous 12 months, and customer base. In other words, it was on a clear path to profitability.
But, soon after, it faced a series of very costly lawsuits that came from FTV Capital — its main investor. FTV claimed that Solid’s co-founders, Raghav Lal and Arjun Thyagarajan, had been lying regarding the firm’s business growth and revenue. The issue was eventually settled outside of court a year ago, in April 2024.
Solid’s Leadership Reviewed Its Options And Chose A Voluntary Chapter 11
Now, Solid filed for bankruptcy, and in its filing, it noted that its capital structure consisted of unsecured trade debt, which ended up being around $760,000. Furthermore, it noted that it has a limited amount of current revenue of around $7 million in cash on hand and only three remaining employees.
As for debtors, they include a lengthy list of entities, including Amazon (AWS), Spade, Plaid, Visa, Trulioo, FS Vector, and multiple law firms.
Arjun Thyagarajan commented on the company’s decision to file for bankruptcy, stating that its leadership reviewed its choices and it decided that a voluntary Chapter 11 restructuring is the best course of action.
However, he added that the firm is optimistic that the court-supervised sale process will attract the right buyer, which could lead to a positive outcome for the company, as well as its customers and shareholders.
He also added that Solid plans to stay operational in the ordinary course through the whole process. However, despite this, experts believe that Solid’s collapse is likely to send further jitters through the BaaS sector, especially after the unwinding of rival provider Synapse in April 2024.
