Trucking lender and factoring company Instapay, alongside its parent company Flexible financing, has filed for Chapter 11 bankruptcy, according to court records filed with the North Texas Bankruptcy Court in Fort Worth.
Flexible, headquartered in San Francisco, offers asset-based lending in the recruiting industry, while Instapay focuses on the transportation industry. Flexible’s loan product allows clients to finance and grow their businesses using accounts receivable they receive from their clients, Flexible attorneys said in a filing last Monday.
Instapay is a factoring company to help suppliers improve their cash flow. It acquires and becomes the owner of the accounts receivable of its customers. Funds from these purchased accounts provide liquidity to Instapay customers, who use Instapay to cover operating costs and bring trucks home after deliveries.
According to a February 2020 FreightWaves article, many full load (TL) carriers depend on factoring to fill cash flow gaps when working with shippers who have longer payment cycles. Those who lack sufficient working capital on how to file bankruptcy and are not eligible for lines of credit turn to factoring to finance their expenses.
The industry providing this type of service is entering a period of consolidation, according to a fireside conversation at the FreightWaves Small Fleet Summit in June 2021.
Flexible and Instapay have between 600 and 700 combined customers, with around 400 currently active. Their portfolio consists of about $ 110 million in loans and factored receivables, according to the filing.
In a joint petition on Monday, Flexible and Instapay asked the courts to allow them to use cash collateral to fund borrowers’ accounts, pay current operating expenses, including salaries, and pay vendors to ensure continuity. operations. Accepting this request will ensure that Flexible and Instapay have the resources to begin Chapter 11 protection.
“Debtors are asking for immediate authorization to use cash collateral to fund the day-to-day operations of debtors. In the absence of such relief, the Debtors will not be able to continue to operate their businesses. In short, failure to obtain authorization for the use of cash collateral will be disastrous for debtors and their creditors, ”said the lawyers representing Flexible.
Judge Edward L. Morris granted the request on Tuesday, authorizing a cash collateral of up to $ 15 million.
“A good cause has been demonstrated for the entry of this order. The Court concluded that the notice of the motion and the hearing on the motion to the US trustee and lenders were sufficient in the circumstances. The entry of this command is justified and appropriate in the circumstances. The entry of this order is in the best interests of the estates of the debtors, ”said the court order on Tuesday.