FlexShopper, Inc. and its affiliated debtors filed an emergency motion on February 24, 2026, seeking bankruptcy court approval to enter into a Transition Services Agreement with ReadySett LLC, the court-approved purchaser of substantially all of the debtors' assets. The agreement is intended to facilitate the orderly transition of loan servicing operations and satisfy a condition precedent to closing the sale, which is targeted for March 2, 2026. The case is pending before the United States Bankruptcy Court for the District of Delaware, Case No. 25-12254 (LSS).
Bankruptcy Background and Sale Process
The debtors commenced voluntary Chapter 11 cases on December 22, 2025, and have continued to manage their assets as debtors in possession. The Official Committee of Unsecured Creditors was appointed on January 6, 2026. No trustee or examiner has been appointed in the cases.
On the petition date, the debtors filed a motion seeking approval of bidding procedures for the sale of substantially all of their assets. On February 12, 2026, the court entered an order approving the sale to ReadySett LLC and authorizing the debtors to consummate the transactions contemplated by an Asset Purchase Agreement dated January 2, 2026. The parties have been working toward a closing date of March 2, 2026, after which the debtors' remaining operations will cease.
The Transition Services Agreement
The emergency motion centers on a Transition Services Agreement between FlexShopper, Inc., FlexShopper, LLC, and FlexLending, LLC (referred to as the sellers) and ReadySett LLC. The agreement arose from negotiations between the purchaser and Powerscourt Investments 50, LP, which serves as the warehouse agent under the debtors' securitization program. A condition precedent in the Asset Purchase Agreement required the entry into a servicing agreement for the post-closing loan portfolio.
Under the agreement reached in principle, the purchaser will service the existing loan portfolio for up to 60 days following the closing of the sale. After that transitional period, servicing obligations will transfer to Vervent, the debtors' existing backup servicer. The debtors will have no obligation in connection with the transition to Vervent or any other party.
The purchaser requires access to certain of the debtors' contracts related to loan servicing during the contract designation period provided for in the Asset Purchase Agreement. In exchange for the debtors' continued performance under those contracts, the purchaser will make direct payments to applicable counterparties for costs incurred.
Cost Protections for the Estates
The Transition Services Agreement is structured to be cost-neutral to the debtors' estates. All expenses related to the loan servicing transition will be paid directly by the purchaser or the warehouse agent. The debtors will not bear any costs associated with the arrangement.
If the purchaser or the warehouse agent defaults on obligations under the agreement, the debtors will have the right to immediately seek to reject the relevant contracts and recover any amounts due and owing, along with related costs and expenses.
Postpetition Funding Structure
The debtors currently obtain postpetition funding from two distinct sources. The first is a DIP facility providing up to $8,000,000 for general operating expenses and professional fees. The second is a securitization program that funds the debtors' customer lease originations and related merchant payments. The motion notes that the DIP lender and the purchaser are the same entity.
Legal Basis for Relief
The debtors seek approval under Sections 105(a) and 363(b)(1) of the Bankruptcy Code on the basis that entry into the Transition Services Agreement represents a sound exercise of business judgment. The motion states that the agreement enables the closing of the court-approved sale on schedule, is cost-neutral to the estates, and is consistent with the terms of the Asset Purchase Agreement.
The motion also seeks a waiver of the 14-day stay under Bankruptcy Rule 6004(h) to allow for immediate implementation of the relief.
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