London, Ontario-based payment processing company Paystone filed for creditor protection in early June amid severe financial difficulties, according to court documents.
This news, which was first reported by Insolvency Insider, follows a yearslong acquisition spree. Since 2019, Paystone has purchased a swath of other FinTech firms, including DataCandy, NXGEN Canada, NiceJob, Canadian Payment Services, and Ackroo, financing these transactions in part using debt.
“The decision to file for CCAA protection was not taken lightly, but due to the economic reality of the situation.”
While those deals “significantly expanded” Paystone’s customer base, product offerings, and geographic reach, a report prepared by its court-appointed monitor AlixPartners indicates the debt the company secured to pursue this inorganic growth strategy has proven untenable given “operational and market headwinds,” including a costly 2025 billing error.
Paystone has obtained Companies’ Creditors Arrangement Act (CCAA) protection and is now seeking approval from the Ontario Superior Court of Justice for a sale to a new numbered company that co-founders, CEO Tarique Al-Ansari and CFO Abdullah Saab, control. This would entail a restructuring that would reduce Paystone’s debt to $60 million. Paystone and its representatives are arguing this is the best available option.
Paystone creditor the Business Development Bank of Canada (BDC) takes issue with that assertion. BDC Capital opposes this proposed sale and is pleading for a full, court-supervised sales process in the hopes of ensuring a more favourable outcome.
BDC Capital has brought forward two letters of intent from other potential bidders, one from Shopley—an entity tied to former Ackroo owner Steve Levely—and another from Valsoft to demonstrate its case that other options should be explored. Paystone and BDC Capital are currently each arguing their case before the court. BetaKit has reached out to the lawyers representing both parties for comments.
Founded in 2009 and formerly known as Zomaron, Paystone is a FinTech firm that provides integrated payment processing, gift card, loyalty and customer engagement software to small- and medium-sized businesses, serving 38,000 merchant customers across Canada and the US. The 118-person company processed more than $50 million in transactions and $7 billion in gross merchant volume over the past 12 months.
RELATED: Paystone to buy fellow payments firm Ackroo for $21 million
Paystone says its high debt burden and rising interest rates, coupled with an April 2025 billing error that saw Paystone overcharge a sizeable amount of its customers by a factor of 100, led to its current liquidity challenges and triggered a default on its loan. This led Paystone to begin exploring a possible sale or new financing opportunity.
“The decision to file for CCAA protection was not taken lightly, but due to the economic reality of the situation,” Al-Ansari told BetaKit over email. “It was in support of the best interests of Paystone.”
As of April, Paystone had approximately $51 million in assets and $118 million in liabilities. BDC, to which Paystone currently owes nearly $12 million, is a subordinate creditor to Sandton, which the company owes more than $92 million.
Al-Ansari said Paystone is “fully operational” at this time, and is currently engaged in “advanced talks” with Sandton for a debtor-in-possession loan to enable it to remain so during CCAA proceedings, which are still ongoing.
As Paystone’s proposed restructuring and sale is a related-party transaction, on June 30, the Ontario Superior Court of Justice granted a stay until July 10 to see if BDC Capital’s objection can be addressed and a resolution can be reached.
Feature image courtesy Paystone.