Solid Financial: From $330M Valuation to Subchapter V Liquidation

Solid Financial Technologies, Inc., the San Mateo-based banking-as-a-service startup that once called itself the "AWS of fintech" and achieved a $330 million valuation after raising nearly $81 million from investors including FTV Capital, filed for Subchapter V chapter 11 bankruptcy on April 7, 2025, in the U.S. Bankruptcy Court for the District of Delaware. The company, which had connected over 100 fintech programs to sponsor banks through its API-driven platform, entered bankruptcy with just three remaining employees after its lead investor sued for fraud, its primary bank partner terminated the relationship, and a pig butchering scandal implicated one of its customers. Through a 238-day case, Solid confirmed a Plan of Liquidation that could return 34.7% to 100% to general unsecured creditors and up to 72% to preferred equity holders. The filing followed the BaaS sector disruption that began with Synapse's collapse in 2024.

Solid's bankruptcy followed investor litigation alleging fabricated revenues, the loss of sponsor bank partnerships amid heightened regulatory scrutiny, and exposure to fraud conducted by a platform customer. The case involved reliance on sponsor bank relationships and exposure to customer misconduct, and it unfolded amid increased federal scrutiny of bank-fintech partnerships.

Company Background and Platform

Solid Financial Technologies, Inc. was incorporated in Delaware in December 2018, originally operating under the name Wise before rebranding. The company established its headquarters in San Mateo, California. Co-founders Arjun Thyagarajan and Raghav Lal had backgrounds that included Thyagarajan's brief service on the USA Cricket National Squad in 2016 and Lal's work launching fintech programs at American Express and Visa.

The company built an API-driven middleware platform designed to connect fintech companies with regulated sponsor banks, marketing itself as the "AWS of fintech" for embedded finance. The platform enabled clients to embed financial services into their applications without obtaining their own banking licenses, offering programmatic account opening at partner banks, payments and money transmission services, card issuance capabilities, and built-in compliance infrastructure. By the time of its Series B funding in August 2022, Solid had over 100 fintech programs operating on its platform and had processed more than $2 billion in transactions through its infrastructure.

Funding and Valuation.

The Series B included approximately $61 million from FTV Capital, with Headline participating as a returning investor. The funding valued Solid at $330 million and followed the company reporting 10x growth in revenue, customer base, and transactions. At the time, management planned to expand the platform into new verticals including travel, logistics, construction, healthcare, education, and the gig economy. The August 2022 raise was Solid's last equity financing, and the company was unable to attract new capital in the subsequent two and a half years leading to bankruptcy.

Bank Partnerships and Business Model.

The banking-as-a-service model that Solid employed required maintaining relationships with regulated sponsor banks willing to provide the underlying banking infrastructure. From 2021 through 2023, Evolve Bank & Trust served as Solid's primary sponsor bank. As regulatory scrutiny of BaaS arrangements intensified and the relationship with Evolve became strained, Solid pivoted to Lewis & Clark Bank as its new primary partner. In fall 2023, Lewis & Clark required a $10 million security reserve and imposed additional reporting requirements as conditions for continuing the partnership. Beyond Lewis & Clark, Solid maintained relationships with three additional sponsor banks. The company also operated a subsidiary, Solid Financial Technologies Private Limited in India, which was wound down with operations ceasing by May 31, 2025.

The Path to Bankruptcy

Solid's bankruptcy followed multiple disputes that depleted financial resources and strained bank partnerships over approximately three years.

FTV Capital Fraud Lawsuit.

In September 2023, lead investor FTV Capital filed a lawsuit in Delaware Chancery Court seeking return of its $61 million investment. The complaint accused co-founders Thyagarajan and Lal of fraud, alleging they had lied about revenues, customer churn, and the state of the business generally. According to reporting on the lawsuit, the allegations included that Solid had invoiced and recorded revenue from customers who were not actually using its services and from customers who lacked the ability or intention to pay. The fraud accusations stemmed from disclosures by a whistleblowing former Solid executive, lending internal credibility to the investor's claims. FTV demanded that Thyagarajan and Lal resign from the company.

The founders refused to step down and instead filed a countersuit on October 9, 2023, describing FTV in court filings as an "aggressive private equity firm." In April 2024, the FTV lawsuit was dismissed with prejudice under a settlement that required Solid to buy back FTV's stake at a discounted price. Reporting described the buyback as draining the company's balance sheet and a factor in the decision to file bankruptcy.

Lewis & Clark Bank Relationship Collapse.

Lewis & Clark Bank had already demanded a $10 million security reserve and enhanced reporting requirements in fall 2023 as conditions for continuing the relationship. On August 29, 2024, Lewis & Clark terminated its Master Services Agreement with Solid, removing the company's primary sponsor bank. The company maintained relationships with three other sponsor banks. Lewis & Clark retained a secured claim against a $50,000 security reserve and maintained setoff rights.

Pig Butchering Scandal.

One of Solid's platform customers became implicated in a fraud scheme. Qbit, a fintech operating on Solid's infrastructure, allegedly laundered millions of dollars through Solid accounts as part of a pig butchering cryptocurrency scam. A class action lawsuit was filed seeking to recover $28 million from the alleged scheme, with the complaint estimating that Qbit defrauded thousands of victims. The fraudster behind Qbit—identified as Yujun Wu, also known as Michael Wu, a Chinese national living in California—had kept approximately $5.3 million with Solid.

In August 2024, Qbit and related entity Gatcha Pictures settled with Solid, Evolve Bank, and the U.S. government. The settlement returned $2.4 million to Evolve and Solid while $1.9 million was forfeited to the federal government. Solid filed for bankruptcy less than one month after victims of the alleged pig butchering scheme filed their class action lawsuit against Qbit.

Additional Litigation.

Beyond the FTV dispute and Qbit scandal, Solid faced multiple other lawsuits that compounded its legal exposure:

• EZBanc I and II: Allegations of negligence and constructive fraud
• Zelf, Inc. v. Solid Financial Technologies: Claims of alleged fraudulent inducement and breach of contract
• Performline, Inc. v. Solid Financial Technologies: Breach of contract claims

The accumulation of litigation from multiple directions—investor, bank partner, and commercial counterparties—created an unsustainable burden for a company already struggling to raise capital and maintain its business relationships.

Inability to Raise Capital.

Solid's last successful equity raise occurred in July 2022, more than two and a half years before the bankruptcy filing. CEO Thyagarajan later attributed the company's inability to attract new investment to the "costly litigation" and the transformed market environment for BaaS companies. The funding slowdown coincided with a broader pullback from fintech investment—where one out of five venture capital dollars globally had been invested in fintech companies in 2021, and by 2023 partner banks had become extremely cautious about BaaS relationships. By the time of the bankruptcy filing, three employees remained, including the CEO, and the company had not engaged any new clients in 2025.

Industry Context: The BaaS Sector Collapse

Solid filed after other BaaS disruptions and regulatory actions that affected sponsor banks and fintech partnerships.

The Synapse Collapse.

A significant industry event preceding Solid's filing was the bankruptcy of Synapse in April 2024, approximately one year before Solid filed. Synapse, backed by Andreessen Horowitz (a16z) and established in 2014 as one of the first BaaS providers, collapsed with an $85 million shortfall in customer funds and nearly $160 million in deposits frozen. As many as 100 fintechs and 10 million end customers were potentially impacted by the failure. Reporting noted confusion around deposit insurance coverage, which protects bank depositors but does not cover losses when a BaaS intermediary fails. Affected companies included Yotta and Juno, while Mainvest, a fintech lender to restaurant businesses, shut down as a result of the Synapse failure. The collapse triggered disputes between Synapse and key partner banks, with Evolve Bank demanding $50 million in reserves and withholding payments. Mercury, one of Synapse's largest fintech clients, abruptly pulled its deposits.

Regulatory Tightening.

Federal regulators responded to BaaS sector problems with enforcement actions. On June 14, 2024, the Federal Reserve Board issued a cease and desist order against Evolve Bank & Trust—Solid's former sponsor bank—citing compliance and risk management failures. The order prohibited Evolve from establishing new fintech partnerships without prior approval.

On July 25, 2024, the Federal Reserve, FDIC, and OCC issued a joint statement addressing banks' oversight of third-party relationships. The statement identified key risk areas including operational and compliance risks, growth challenges, and end user confusion about deposit insurance coverage. Over the 18-month period between June 2023 and December 2024, federal banking agencies entered into numerous consent orders against banks maintaining fintech relationships. Partner banks became more cautious about BaaS relationships.

Funding Drought and Market Transformation.

After 2021 saw one out of every five venture capital dollars globally invested into fintech companies, the sector experienced a pullback. Community banks that had jumped into the BaaS space during the boom years retreated, and by 2023 few platforms were launching new products as partner banks became extremely cautious. Industry observers expected the Synapse collapse to have long-term negative impacts on all of fintech, particularly consumer-facing services.

Regulatory Shifts and Direct Charter Trend.

By 2025, U.S. banking regulation was undergoing a material reset under new leadership at the Federal Reserve, OCC, and FDIC. In December 2024, the Fed issued a request for information on "skinny" master accounts. Through 2025, the OCC received 14 de novo charter applications for limited purpose national trust banks, with many applications involving fintech and digital-asset firms seeking their own bank charters rather than relying on third-party partnerships.

Subchapter V Plan of Liquidation

Solid elected to proceed under Subchapter V of Chapter 11, the small business reorganization pathway that provides streamlined procedures and reduced costs for eligible debtors. With three employees and limited ongoing operations, Solid qualified for the simplified process. Solid's case evolved into a liquidation when the sale process failed to produce a going-concern buyer.

Case Administration and Sale Process.

CEO Arjun Thyagarajan submitted the First Day Declaration establishing the factual predicate for the bankruptcy. Initial orders were entered on April 11, 2025, covering employee wages, cash management, and appointment of Omni Agent Solutions as claims and noticing agent. Rock Creek Advisors was engaged to guide the company through chapter 11 and evaluate restructuring and sale opportunities. The bidding procedures established a June 4 bid deadline with an auction scheduled for June 10. However, the sale process did not yield a going-concern transaction—no buyer emerged willing to acquire the company's technology platform and continue operations. The failure of the sale process led to the shift toward a liquidation structure.

Plan Evolution and Confirmation.

The initial Plan of Liquidation was filed on July 7, 2025, following the conclusion of the sale process. The plan underwent two amendments as the debtor resolved claims disputes and refined distribution mechanics. The Second Amended Subchapter V Plan of Liquidation was confirmed on November 14, 2025, after a confirmation hearing on November 12. The Effective Date occurred on November 30, 2025, vesting debtor assets in the Liquidation Trust and initiating the dissolution of Solid Financial Technologies, Inc.

Liquidation Trust Structure.

Rock Creek Advisors, which had served as the debtor's financial advisor and sales agent prepetition, transitioned to the role of Liquidating Trustee post-confirmation. The Liquidating Trustee assumed responsibility for managing the trust, making distributions to creditors and equity holders, and pursuing remaining causes of action.

Treatment and Recovery by Class.

Priority and Secured Claims. Priority claims under Class 1 and secured claims under Class 2 were classified as unimpaired, with both classes expected to receive 100% recovery. The primary secured creditor was Lewis & Clark Bank, whose allowed secured claim was limited to $50,000 with setoff rights against the security reserve.

General Unsecured Claims. Class 3 general unsecured creditors received impaired treatment with pro rata distributions from the Liquidation Trust. The estimated recovery range of 34.7% to 100% reflected uncertainty about the ultimate size of the allowed claims pool and the effect of claims objections. Key unsecured creditors included Amazon Web Services, which negotiated a settlement requiring the Liquidation Trust to pay $119,413.56 in full satisfaction of its claim.

Equity Interests. Under the Plan of Liquidation, Class 5 common equity interests were cancelled with zero recovery, while Class 4 preferred equity holders were estimated to receive up to 72% recovery. The plan structure provided for preferred equity to receive residual value only after Class 3 general unsecured claims were paid in full.

Key Plan Provisions.

Discharge and Dissolution. Upon the Effective Date, debtor assets vested in the Liquidation Trust and the corporate debtor was set for dissolution.

Releases and Exculpation. The plan included debtor releases, consensual third-party releases requiring opt-in, and exculpation provisions protecting parties from liability for conduct during the bankruptcy case. Notably, Lewis & Clark Bank was explicitly excluded from the third-party release provisions, preserving any claims that might exist against the former sponsor bank.

Contract Treatment. All executory contracts and unexpired leases were deemed rejected as of the Effective Date unless previously assumed during the case.

Claims Disputes

The contested claims in Solid's case primarily involved late-filed claims and objections.

Tolomeo Bank Late Claims.

Tolomeo Bank International Corp. and Tolomeo Bank Limited filed claims on June 10, 2025—four days after the June 6 general bar date. The late filing triggered litigation over whether the claims should be allowed. On October 2, 2025, Tolomeo filed a motion for leave to file late claims. The debtor objected on October 29, 2025, arguing the claims were untimely and should be disallowed. The Confirmation Order ultimately resolved the procedural dispute by deeming the claims timely filed, but the debtor preserved its objection to the substance and validity of the claims themselves.

Omnibus Claims Objection.

On August 25, 2025, the debtor filed its First Omnibus Objection to Late Filed Claims challenging claims submitted after the bar date. The objection was sustained by order entered November 14, 2025—the same day as confirmation. The Nevtec Inc. claim was disallowed as untimely, reducing the claims pool and improving potential recoveries for timely-filed claims.

Amazon Web Services Settlement.

The claim filed by Amazon Web Services was resolved through a negotiated settlement rather than objection. Under the settlement terms, the Liquidation Trust agreed to pay $119,413.56 in full satisfaction of AWS's claim. The settlement eliminated uncertainty about the AWS claim amount and provided for complete resolution of the technology services debt.

Professional Retentions

Debtor Professionals.

Ordinary Course Professionals.

Quinn Emanuel was retained as litigation counsel. A stay relief stipulation with Quinn Emanuel was approved on July 22, 2025, allowing certain litigation matters to proceed outside the automatic stay.

Key Timeline

Frequently Asked Questions

When did Solid Financial Technologies file for bankruptcy?

Solid Financial Technologies filed for Subchapter V chapter 11 bankruptcy on April 7, 2025, in the U.S. Bankruptcy Court for the District of Delaware. The case was assigned case number 25-10357 and was heard by Judge J. Kate Stickles.

What was Solid's business model?

Solid operated as a banking-as-a-service (BaaS) platform that provided API-driven middleware connecting fintech companies with sponsor banks. The platform enabled fintech clients to offer embedded financial services—including accounts, payments, and card issuance—without obtaining their own banking licenses. The company marketed itself as the "AWS of fintech."

How much funding did Solid raise before bankruptcy?

Solid raised approximately $80.7 million over three funding rounds. The company's $63 million Series B, led by FTV Capital in August 2022, valued the company at $330 million. FTV invested approximately $61 million of the round. Headline also participated as an investor.

What caused Solid to file for bankruptcy?

Multiple factors contributed to Solid's bankruptcy. FTV Capital's fraud lawsuit and the subsequent settlement depleted the company's balance sheet. Lewis & Clark Bank terminated its sponsor bank relationship in August 2024 after requiring a $10 million security reserve. The pig butchering scandal involving platform customer Qbit created additional legal exposure. The company had been unable to raise new capital since July 2022 amid broader distress in the BaaS sector.

What was the FTV Capital fraud lawsuit about?

FTV Capital sued in September 2023 seeking return of its $61 million investment, alleging the founders fabricated revenue numbers, lied about customer churn, and invoiced customers not actually using the platform's services. A whistleblower executive had disclosed the alleged practices. The lawsuit was dismissed in April 2024 under a settlement requiring Solid to buy back FTV's stake at a discounted price.

What was the pig butchering scandal?

Qbit, a fintech operating on Solid's platform, allegedly laundered millions through Solid accounts as part of a pig butchering cryptocurrency scheme. Victims filed a class action seeking to recover $28 million, estimating thousands were defrauded. In August 2024, Qbit settled with Solid, Evolve Bank, and the U.S. government, returning $2.4 million to Solid and Evolve while forfeiting $1.9 million to the federal government.

What was the case outcome?

The company confirmed a Second Amended Subchapter V Plan of Liquidation on November 14, 2025, with an Effective Date of November 30, 2025. Rock Creek Advisors serves as Liquidating Trustee to wind down remaining assets and make distributions to creditors and, potentially, to preferred equity holders.

What are the estimated creditor recoveries?

General unsecured creditors are estimated to receive 34.7% to 100%, depending on the outcome of claims objections. Priority and secured claims are expected to receive 100% recovery. Unusually, preferred equity holders may receive up to 72% recovery after general unsecured claims are paid in full. Common equity was cancelled with zero recovery.

How many employees remained at the time of filing?

Only three employees remained when Solid filed for bankruptcy, including CEO Arjun Thyagarajan. The company had not engaged any new clients in 2025 and was operating in wind-down mode prior to the petition.

How does Solid's failure relate to the broader BaaS sector collapse?

Solid's bankruptcy followed Synapse's April 2024 collapse, which froze nearly $160 million in deposits and affected up to 10 million customers. The Federal Reserve issued cease and desist orders against BaaS partner banks, and sponsor banks became increasingly reluctant to maintain fintech relationships. Reports described fintechs pursuing bank charters rather than relying on BaaS intermediaries.

Who is the claims agent for Solid Financial?

Omni Agent Solutions, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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