Synapse Financial Technologies, a US banking-as-a-service provider that connects fintech companies with partner banks, filed a voluntary petition for Chapter 11 bankruptcy protection on 22 April 2024 and agreed to sell its assets to payments company TabaPay for $9.7 million.
The case was filed in the US Bankruptcy Court for the Central District of California, and the sale of Synapse's assets and affiliates to TabaPay requires the court's approval. In its petition, Synapse estimated both its assets and its liabilities at between $10 million and $50 million, with between 50 and 99 creditors. Its listed creditors include Amazon Web Services, Evolve Bank & Trust, Mastercard and Mercury.
DISPUTE WITH MERCURY
The filing follows a dispute with fintech company Mercury, which had terminated Synapse as an intermediary in order to work directly with Evolve Bank & Trust, one of Synapse's partner banks, leading to a $30 million arbitration case. Synapse chief executive Sankaet Pathak had previously disclosed that the company owed approximately $14 million to customers other than Mercury.
In LinkedIn messages to Banking Dive, Pathak said: “We signed a deal with TabaPay and then filed for chap 11 as that was the buyer preference to be able to do this deal free and clear.” In a post on X, he also accused Mercury of “torturously interfering with the process”.
Rodney Robinson, co-founder and chief executive of TabaPay, said: “The addition of the Synapse features is an acceleration of our TabaPay story, one dedicated to delivering great solutions that help our clients rapidly innovate, save money, and offer great financial products to their customers.” He added that the assets would allow TabaPay to grow its offerings while “providing continuity to Synapse clients and banks”.
Synapse had cut its workforce twice in 2023, reducing staff by 18% in June and by a further 40%, or 86 employees, in October.
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