Planswell, a Toronto fintech startup that provides free financial plans to consumers online, entered receivership in late April after its chief executive officer “absconded” abroad, according to court records.
FVP Servicing LLC, an administrative agent for a lending fund managed by New York-based Feenix Venture Partners, obtained an order last month from the Ontario Superior Court of Justice to appoint a receiver for the company. It said the startup owes its lenders roughly US$1.85-million ($2.5-million) and has defaulted on its payments. Receivership is a process that allows for the sale of a company’s assets to repay its debts.
In the court documents, FVP alleges that Planswell’s CEO, Eric Arnold, departed for Colombia in early February, with no intention of returning home. He began sending e-mails that the court records describe as “erratic” shortly before leaving Canada, roughly around the same time the company was experiencing a liquidity squeeze.
However, Mr. Arnold continued “surfacing” to collect his salary, even after he ceased operating the company, FVP alleged in the documents.
“There is no debate that the company is rudderless,” FVP’s lawyers wrote in the receivership application.
It’s the second time that Planswell, once a prominent startup with funding from Bay Street giants, has defaulted on its financial obligations. The company closed its doors in 2019 after failing to secure additional capital from investors and entered bankruptcy in 2020. But it quickly re-emerged the same year with a new business model that connected users of its free financial plans with external advisers, instead of offering advice in-house.
2019: Canadian robo-adviser Planswell shuts down after investors pull planned financing
In an interview with The Globe and Mail on the phone from Medellín, Colombia, Mr. Arnold said he left for South America in early February for what was supposed to be a four-day vacation but became stranded there after criminals illegally captured his bank card data and drained his account.
Mr. Arnold also said he is on paid leave and acknowledged collecting his salary while in Colombia.
Matthew Harris, a lawyer with Spetter Zeitz Klaiman PC, which is legal counsel to FVP on this matter, wrote in an e-mail that Mr. Arnold no longer represents Planswell.
Feenix Venture Partners and Scott Wetton, Planswell’s co-founder, did not respond to requests for comment.
As of the beginning of the year, the company had around 25 employees in Canada and about five staff working for its subsidiary in the U.S., Mr. Arnold said.
FVP said in court records it had granted Planswell access to a US$3-million ($4.1-million) credit facility, from which the company drew a total of US$1.75-million ($2.4-million) between 2022 and 2023.
But by the start of this year, the firm had little revenue from sales and was running short on cash, according to the court records. In an e-mail reproduced in the files, Mr. Wetton warned Mr. Arnold in early February that the firm would struggle to make payroll later that month.
But Mr. Arnold’s e-mail correspondence with Mr. Wetton and other Planswell executives, as well as with management at Feenix Venture Partners, in the following days and weeks was incoherent and at times unrelated to the business, evidence included in the court records shows.
The company missed loan repayments in March and April, according to the documents.
Mr. Arnold told The Globe that he’s working on setting up and growing other companies and plans to buy back Planswell.
A Toronto Police Service spokesperson wrote in an e-mail that there is an arrest warrant for Mr. Arnold. In the phone interview, Mr. Arnold said the warrant is not related to Planswell or the receivership.
