Company Behind Silvergate Bank Files for Chapter 11 Bankruptcy

Silvergate Capital Corporation, the parent entity of Silvergate Bank, has entered Chapter 11 bankruptcy proceedings in Delaware.

As of September 17, the company’s filing reveals assets between $100 million and $500 million and liabilities ranging from $10 million to $50 million. The bankruptcy also involves Silvergate’s affiliates, Silvergate Liquidation Corporation and Spring Valley Lots LLC.

Under its Chapter 11 plan, Silvergate aims to address various debts, including administrative and high-priority claims, in full. However, it proposes to cancel certain claims tied to common stock and securities lawsuits. Internal company debts are slated for reinstatement, while preferred shareholders will receive partial payments based on their holdings.

This move follows the bank’s closure due to liquidity issues 18 months ago. Silvergate attributed its downfall to the banking sector’s strain from rising interest rates and heightened regulatory scrutiny post-FTX collapse. In March 2023, the company decided to liquidate Silvergate Bank, citing these challenges.

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Despite its close ties with the crypto sector, Silvergate faced a significant blow in confidence after FTX’s collapse. The SEC sued the bank in July for allegedly facilitating fraud at FTX, though the Federal Reserve Board later dropped charges following Silvergate’s successful wind-down and customer reimbursements.

Alexander Stefanov

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