Bench Fintech Bankruptcy: $65 Million in Debt Revealed

Bench Accounting Files for Bankruptcy, Reveals Extensive Debts

The accounting startup, Bench, which unexpectedly ceased operations during the holiday season, officially filed for bankruptcy in Canada on January 7th. Court documents reviewed by TechCrunch detail substantial financial obligations.

Financial Overview

The bankruptcy filings, submitted for both Bench and its original entity, 10Sheet, indicate the company possessed $2.8 million in cash reserves at the time of its collapse. However, this was overshadowed by a total of $65.4 million in outstanding liabilities. (Figures have been converted from Canadian to U.S. dollars using an exchange rate of $1 USD to $1.44 CAD.)

Funding and Debt

Established in 2012, Bench had successfully secured $113 million in funding from various investors, including prominent firms like Shopify and Bain Capital Ventures.

A significant portion of Bench’s debt, amounting to $51 million, is owed to the National Bank of Canada, a major financial institution within the country. Critically, over 85% of this debt is unsecured, meaning the bank holds limited assets as collateral following the company’s default.

Shutdown Trigger?

Reports suggest this debt situation may have contributed to Bench’s abrupt closure. According to the publication Newcomer, the National Bank of Canada reportedly refused to offer concessions during discussions regarding a potential sale of the company. A request for comment sent to NBC has not yet received a response.

Investor Obligations

The filings also highlight financial commitments to Bench’s venture capital investors, structured as both convertible notes – designed for future equity conversion – and direct shareholder loans.

• Bench owes $1.3 million to Bain Capital Ventures. Partner Sarah Hinkfuss joined Bench’s board in 2023.
• A further $1.2 million is owed to Canadian VC firm Inovia Capital. Executive-in-residence Adam Schlesinger served as Bench’s final CEO.
• Contour Venture Partners, leading Bench’s $60 million Series C funding round, is owed approximately $750,000.
• Altos Ventures, a California-based investor, has a claim of $777,000.

All investor-related debt is currently classified as unsecured.

Employee and Executive Payments

Bench’s outstanding obligations include $1.8 million in severance payments to former employees. Previous reporting by TechCrunch detailed the sudden termination of Bench’s workforce on December 27th, without prior notice or severance packages. (The company’s new owner, Employer.com, states that a substantial number of employees have been rehired, albeit on temporary 30-day contracts while operational issues are resolved.)

Severance is also owed to former executives, including CEO Jean-Philippe Durrios, CRO Todd Daum, and CFO Mor Lakritz. Ms. Lakritz’s LinkedIn profile indicates Bench generated approximately $50 million in annual recurring revenue.

Additional Expenses

The bankruptcy documents reveal a $4 million debt to Canadian real estate agency Morguard, likely representing unpaid office rent. At its peak, Bench employed over 600 individuals. Beyond employee compensation, office expenses, and roughly $1.5 million owed to various service providers, the filings do not detail the allocation of the remaining funds.

Acquisition by Employer.com

Concurrently with the bankruptcy proceedings, Bench is undergoing acquisition by San Francisco-based HR technology company Employer.com. Customers have reported being required by Employer.com to transfer their data or risk losing access.

Employer.com’s Perspective

Gary Levin, head of corporate development at Employer.com, stated that the Canadian court is overseeing the insolvency process and will manage the distribution of assets to creditors. He further emphasized Employer.com’s robust financial position, enabling significant investment in Bench’s future.