Railsbank seeks sale through insolvency process

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

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

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

A spokesperson for Railsbank 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 recapitalised. We have made significant and positive progress and we continues 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 it was worth nearly $1 billion — has run into both regulatory and financial problems, according to the report.

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

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

It was reported this week that Railsbank’s attempt 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 “transform the financial 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 UK that allows merchants to offer branded and fully integrated payment experiences, giving them “a greater share of change”, Railsbank said when launching this offering.