Railsbank Reportedly Seeking Sale Through an Insolvency Process

Railsbank Technology is reportedly close to being sold through an insolvency process.

Directors are close to selling the United Kingdom-based FinTech company through a form of bankruptcy called a “pre-pack administration” in which a buyer is lined up beforehand, Bloomberg reported Friday (March 3), citing unnamed sources and adding that a sale has not been finalized and may not happen.

Railsbank — which does business as Railsr — did not immediately reply to PYMNTS’ request for comment.

A Railsbank spokesperson told Bloomberg in an email: “We are hopeful that we will find a safe harbor for the business that will enable Railsr to continue — fully operational and recapitalized. We have made significant and positive progress and we remain in ongoing discussions with interested parties as part of our M&A process.”

The company — which said it has raised more than $100 million from investors and whose co-founder and CEO said in 2021 that it was worth almost $1 billion — has run into problems both regulatory and financial, according to the report.

Its regulated U.K. subsidiary is being audited by the country’s Financial Conduct Authority (FCA) and its local unit in Lithuania was stopped from taking on new customers last month by the Bank of Lithuania, which raised questions about its adherence to anti-money laundering (AML) and terrorist-financing laws, the report said.

In another challenge recently faced by the company, Railsbank had to return money it had borrowed via a $20 million debt facility announced in October after the lender grew concerned about the firm’s stability and demanded the money back, per the report.

It was reported this week that Railsbank’s efforts to sell itself to a Nigerian FinTech company collapsed, according to the report.

Railsbank offers digital banking services and was said by its co-founder to be “transforming the finance industry in the same way that Apple did to the music industry when they created iTunes.”

The firm also launched a buy now, pay later (BNPL) tool in Germany and the U.K. that lets retailers offer branded and fully integrated payment experiences and gives them “a greater share of the spoils,” Railsbank said when launching that offering.