Plastiq files Chapter 11 bankruptcy to facilitate sale of assets

By Sarah Lizee

Olympia, Wash., May 24 – Plastiq, Inc. filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the District of Delaware to facilitate a sale of its assets.

Priority Technology Holdings, Inc. is acting as stalking horse bidder for the assets, according to a press release from the proposed purchaser.

The deal is subject to higher or better bids during a court-approved auction process.

The company is hoping to close a sale within 75 days.

In early 2023, the company began exploring a strategic alternatives process to maximize the value of their assets, and in February, Triple P RTS, LLC was retained to provide a chief restructuring officer and other associated personnel.

On Feb. 17, the company’s board authorized the formation of a special restructuring committee with the authority to approve a recapitalization, refinancing, restructuring or other alternative strategic transaction.

The company said it remained in close communication with its prepetition secured lenders to determine their interest in participating in or approving a transaction.

When it became clear that an acceptable out-of-court transaction might not materialize on the required timeline, the debtors pivoted toward negotiating the terms of a Chapter 11 process.

Following weeks of negotiations, the prepetition secured lenders agreed to provide a $7.1 million debtor-in-possession facility to the company.

Prepetition lender Blue Torch Finance, LLC is the DIP agent.

The facility will bear interest at SOFR plus 1,200 basis points and is set to mature on Sept. 20, subject to earlier termination following certain events.

The company is also seeking approval to use the cash collateral of its prepetition secured lenders.

There is currently about $43.33 million of outstanding debt under the company’s prepetition term loan credit agreement with Blue Torch.

In its petition, the company listed 1,000 to 5,000 creditors, $50 million to $100 million in assets and $50 million to $100 million in liabilities.

Its largest unsecured creditors are Brex, based in San Francisco, with a $3.3 million trade debt claim and Deloitte & Touche LLP, based in San Francisco, with a $2 million professional fees claim.

Young Conaway Stargatt & Taylor, LLP is proposed bankruptcy counsel.

San Francisco-based Plastiq provides a software platform for business-to-business payment automation. Its Chapter 11 case number is 23-10671.

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