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TabaPay will pay about $9.7 million in cash to buy the assets of bankrupt fintech player Synapse, per court filings yesterday.

Why it matters: It's a far cry from Synapse's former valuation, but it will be enough to pay back Synapse's secured creditors.

Between the lines: The $9.7 million was negotiated with the express purpose of covering Synapse's secured debts owed to Silicon Valley Bank and First Citizens Bank.

As of this month, those lenders are owed $8.7 million, per the filing. 

Unsecured creditors, which include Kroll Associates, are also expected to receive some payout.

Synapse, per PitchBook, was once valued at $180 million, but its shareholders, including a16z, will not see any of the $9.7 million.

What we're watching: The figure is still subject to court approval, meaning the value could change.

By the numbers: Synapse — which helps fintechs open bank accounts on behalf of their customers — works with some 20 financial institutions and 100 fintechs, reaching about 10 million end users.

Behind the scenes: According to the filing, Synapse had anticipated a slowdown in the BaaS ecosystem and had begun seeking funding to pivot its strategy sometime prior to mid-2023.

But unnamed "investor directors" vetoed a $100 million term sheet that would have allowed the company to change gears, launch in-house products and potentially even buy a bank, it alleges.

Mercury, one of Synapse's largest customers, then cut ties with Synapse and directly entered a relationship with Evolve Bank. 

It also sued the BaaS company seeking $30 million. Synapse countersued, seeking over $36 million.

Synapse hired William Blair and, later, Sherwood Partners to explore a sale.

The bottom line: The TabaPay deal is a lifeline for Synapse, enabling it to continue serving customers and cutting off the likelihood of additional messy lawsuits from that group.

It doesn't, however, end the battle with Mercury, with a spokesperson at the neobank writing in a statement to Axios: "Mercury has significant claims against Synapse. We are pursuing those in the appropriate forums, which may include the bankruptcy process."

For its part, Synapse claims in the bankruptcy filing that it expects to "recover substantial funds" from Mercury.

TabaPay to pay about $9.7M in Synapse deal

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Fintech

TabaPay will pay about $9.7 million in cash to buy the assets of bankrupt fintech player Synapse, per court filings yesterday.Why it matters: It&#x27;s a far cry from Synapse&#x27;s former valuation, but it will be enough to pay back Synapse&#x27;s secured creditors.

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TabaPay to pay about $9.7M in Synapse deal

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