The parent company of the now-closed Silvergate Bank, Silvergate Capital Corporation, has Delaware Chapter 11 bankruptcy protection filed for. Submitted on September 17, the bankruptcy petition reveals assets worth between $100 million and $500 million together with debt ranging from $10 million to $50 million. The complaint also includes affiliates of Silvergate, Silvergate Liquidation Corporation and Spring Valley Lot LLC.
The bankruptcy proposal and its ramifications
Silvergate intends to completely pay off several high-priority debts—including administrative fees, taxes, secured loans, and professional services—as part of its reorganizing. Silvergate intends to entirely revoke claims pertaining to securities litigation and ordinary stock, however. Silvergate also plans to restore debt across its own businesses, paying partial payments depending on favored shareholders.
Background and Difficulties
After a difficult period defined by liquidity problems and a notable drop in trust following the fall of the cryptocurrency exchange FTX in November 2022, Silvergate’s bankruptcy follows Renowned for close links to the cryptocurrency industry, the bank battled with growing rates and more scrutiny of regulations. Silvergate said in March 2023 that Silvergate Bank, a subsidiary, will be voluntarily liquidated.
Regulatory Policies
The U.S. Securities and Exchange Commission (SEC) sued Silvergate Capital in July 2023 claiming the bank enabled fraud at FTX. Later that month, though, the Federal Reserve Board withdrew its allegations against Silvergate after the bank effectively closed down and paid back clients.
Still, Silvergate agreed to pay $63 million to resolve allegations with the Federal Reserve, California Department of Financial Protection and Innovation (DFPI), and SEC. The complaint of the SEC pointed out that Silvergate missed around $9 billion in dubious transactions connected to FTX. Court clearance is ne
