Blackthorn Finance - Case Update

The joint special administrators of failed payment services provider Blackthorn Finance have released a report outlining what led to the firm’s downfall and whether customers can expect to receive their money back.

Blackthorn (then known as Senit Remittance Limited) was founded in 2016. The firm was authorised by the FCA to offer a complete payment service solution to corporate SMEs and select individual customers, including international payments and foreign exchange transactions. Its principal sources of revenue were fees and commissions charged to customers, with revenue linked to the number of customers using the platform, the number of transactions, and the value of transactions. At its peak in late 2023, Blackthorn held customers funds totalling approximately £40 million in segregated accounts with certain “correspondent banks”—namely ABN AMRO bank N.V., Banking Circle S.A. and ClearBank Limited.

Blackthorn was purchased by Steven FS Limited, the parent company of the wider Blackthorn Group, around December 2018 when the business was in its infancy. The business grew rapidly, with annual revenues increasing from £181k to £3.4 million between 2020 and 2022. Nevertheless, Blackthorn recorded losses during this period of growth and was able to continue as a going concern only through ongoing support from its parent, Steven FS.

Around May and July 2023, Blackthorn received termination notices from two of the banks due to a change in their risk appetite, resulting in Blackthorn not being able to access circa 70% of the segregated customer funds to meet customer payments put in train. Blackthorn continued to trade whilst it sought to have the services reinstated, until November 2023, when the FCA imposed restrictions on Blackthorn’s activities and an asset requirement.

Between November 2023 and March 2024, Blackthorn sought to have the FCA restrictions lifted (which it was not able to do) whilst it also worked to secure permissions elsewhere in the Blackthorn Group to replace and add to the services offered by Blackthorn. The latter proved successful and, in April 2024, the Blackthorn Group entered members voluntary liquidation, commencing an orderly and solvent wind down funded by Steven FS, resulting in the off-boarding of some 42 customers and the transfer of certain employees to other members of the Blackthorn Group.

Liquidators S&W Partners (formerly Evelyn Partners) ultimately reached the view that Blackthorn did not have sufficient assets to meet creditor claims, and Adam Stephens, Philip Hemming and Kevin Ley were appointed as joint special administrators on 14 April.

Since their appointment, the administrators have conducted a reconciliation which has revealed £17.93 million in customer funds held across the correspondent banks, while customer entitlements appear to total £18.94 million based on the company’s books and records, representing a presently estimated shortfall of circa £1.01 million. The administrators are taking steps to minimise this shortfall by attempting to collect funds from customers with overdrawn ledger balances (which appear to total around £659 thousand).

The administrators have also received additional claims from parties who appear to be customers of another entity—a Canadian company known as Blackthorn Pay Inc. (also referred to as BT Pay). This book consists of 81 customers and, to date, the administrators have received claims from 22 of these customers totalling approximately £1.83 million. These customers are claiming a combination of cash and crypto assets. BT Pay has admitted it is accountable to this book of customers and confirmed that it holds sufficient assets to repay these liabilities.

The administrators currently estimate that Blackthorn customers will receive a return of about 80% of their funds, while other creditors will likely not receive a distribution.

Read the administrators’ proposals HERE. They have been assisted by Dentons.