Solid, the banking-as-a-service startup formerly known as Wise, is now under Chapter 11 protection as it faces mounting financial and legal challenges. The company has experienced difficulties raising new capital and has been affected by a series of litigations. Recent events have raised questions about its expansion strategy and operational sustainability.
Bankruptcy Filing Details
Funding and Legal Disputes
Earlier reports described a robust expansion following a $63 million funding round in August 2022, which supported its strategy to enter sectors such as travel, logistics, healthcare, education, and the gig economy. Additional sources reported that Solid promoted its platform as a tool for companies to launch FinTech products using modern APIs with minimal technical effort. Some investigations had raised concerns over manipulated revenue figures, triggering internal reviews.
Solid officially sought Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware after failing to secure additional funds beyond the Series B round. The decision comes in the wake of costly litigation, including a suit filed by a Series B investor seeking to recover its investment, placing further strain on the company’s financial footing.
During the August 2022 funding round, the startup raised $63 million intended to accelerate its growth efforts. Solid aimed to leverage this capital to expand its banking-as-a-service offerings, enabling businesses to integrate bank accounts, crypto wallets, payments, and card issuance into their products with a few lines of code.
Co-founder Arjun Thyagarajan addressed the situation, emphasizing the company’s path forward.
After considering all options, we’ve decided that a voluntary Chapter 11 restructuring is the best course. We’re optimistic that the court-supervised sale process will attract the right buyer, leading to a positive outcome for the company, customers and shareholders. Solid intends to continue operating its business in the ordinary course through this process.
His remarks underscore the leadership’s intent to maintain business operations during the restructuring process.
Reports also indicate that legal challenges extend beyond the bankruptcy filing. Investors such as FTV Capital are considering further legal action, while lawsuits by BSI Group LLC and International Business Solutions Group accuse Solid of fraud, negligence, and breach of fiduciary duty. These actions have compounded the company’s financial difficulties and raised concerns among various stakeholders.
The filing marks a pivotal moment in Solid’s journey, where operational ambitions confront legal and financial realities. Stakeholders and industry observers are advised to monitor the developments in the restructuring process as they may influence how the company sustains its FinTech infrastructure and customer promise over time.
