US Banking-as-a-Service platform Solid has initiated Chapter 11 bankruptcy proceedings.
Solid was valued at $33 million after a $63 million Series B funding round led by FTV Capital in August 2022. At that time, the company reported a remarkable 10-fold increase in its revenue, customer base, and transaction volume over the previous year, along with a clear trajectory toward profitability.
However, the company faced significant challenges, including costly legal disputes with FTV Capital, which alleged that co-founders Arjun Thyagarajan and Raghav Lal had misrepresented the company’s financial health. This legal matter was settled out of court in April 2024.
In its bankruptcy filing, Solid disclosed that its financial structure includes approximately $760,000 in unsecured trade debt, alongside limited current revenue. The company has reported around $7 million in cash reserves and only three remaining employees.
Among its creditors are major firms such as Amazon (AWS), FS Vector, Visa, Plaid, Trulioo, Spade, and various law firms.
“After exploring all possible alternatives, we believe that a voluntary Chapter 11 restructuring will provide the best path forward,” stated co-founder Arjun Thyagarajan in an interview with TechCrunch. “We are hopeful that the court-supervised sale process will attract a suitable buyer, resulting in a favorable outcome for the company, its customers, and shareholders. Solid plans to continue its operations normally throughout this restructuring.”
The downfall of Solid raises additional concerns within the BaaS sector, especially following the recent collapse of competitor Synapse in April of last year.