Thanks to recently made public bankruptcy documents, a more complete picture of Bench’s demise is becoming apparent.
The Canadian startup, which ironically provided cloud accounting software for small businesses, has continuously failed to turn a profit. From the time of its establishment in 2012 to September 2024, it spent $135 million.
According to the documents, Bench was compelled to close around the time of its demise because of a “liquidity crisis.” While a separate account for its U.S. firm had less than $400,000 in cash, Bench’s Canadian account had $800,000.
Bench has made some strides in recent years to reduce its burn. Former employees claim that the primary goal of Bench’s second CEO, the former CFO, was to improve finances by implementing layoffs.
For instance, from March 2022 to March 2023, Bench lost over $30 million on $42 million in revenue. However, Bench increased revenue to $49 million in the following fiscal year while halving its losses.
Such improvement was insufficient to prevent Bench’s losses from mounting. According to the statement, Bench’s largest lender, the private National Bank of Canada (NBC), provided more than $40 million in loans to Bench in June 2024 while the business faltered.
As a result, Bench had more time to negotiate a sale. That was the responsibility of its third CEO. NBC also showed up on board. According to the lawsuit, NBC and Bench inked a new funding and forbearance agreement on December 12, 2024, only 13 days before Bench’s demise. This arrangement meant that NBC would temporarily suspend or alter the startup’s loan payback obligations.
The reasons behind Bench’s two-week closure are not clearly stated in the records. According to The Information, Bench’s venture loan was called in by a bank, potentially NBC.
In any case, barely 72 hours after the startup’s demise, U.S.-based Employer.com abruptly announced it intended to buy it, setting Bench on a new course. According to the filing, that procedure is predicated on an agreement that “contemplates” a closing date of February 28, 2025.
However, Bench’s bankruptcy provides insight into the risks associated with excessive debt for companies. According to analysts, the fire sales and startup shutdowns that are expected to continue at a rapid pace this year will be significantly influenced by venture financing lenders.
