Silvergate Capital Corporation, the parent company of the now-defunct Silvergate Bank, has officially filed for Chapter 11 bankruptcy in Delaware.
The filing, submitted on September 17, lists the company’s assets between $100 million and $500 million, with liabilities ranging from $10 million to $50 million.
The bankruptcy petition also includes Silvergate’s affiliated entities, Silvergate Liquidation Corporation and Spring Valley Lots LLC.
This development comes 18 months after Silvergate Bank, once known for its strong ties to the crypto industry, shut down operations due to a combination of liquidity challenges and mounting regulatory pressures.
The bank had been a significant player in crypto banking, but the collapse of FTX in late 2022 severely impacted its reputation and operations.
In its reorganization plan, Silvergate aims to settle certain high-priority debts, including administrative fees, taxes, and secured loans, while other claims—such as those related to common stock and securities lawsuits—will be cancelled.
Preferred stockholders may see partial payments based on their shareholdings, while debts between Silvergate’s internal companies are expected to be reinstated.
Silvergate’s troubles escalated in March 2023 when the company announced the voluntary liquidation of its banking subsidiary, citing rising interest rates and the fallout from FTX’s failure as major contributing factors.
The bank’s collapse marked a significant turning point for crypto-friendly financial institutions, as confidence in the sector plummeted.
Earlier this year, Silvergate faced legal challenges, including a lawsuit filed by the U.S. Securities and Exchange Commission, accusing the company of facilitating fraud at FTX.
Despite these allegations, the Federal Reserve Board later dropped its enforcement actions against the bank after it successfully wound down operations and reimbursed customers.
Silvergate Capital’s bankruptcy is being handled by legal firms Richards, Layton & Finger, and Cravath, Swaine & Moore LLP, with financial advice provided by AlixPartners.
