Prime Trust Files for Chapter 11 Bankruptcy
Jessie A Ellis Aug 15, 2023 04:00
Prime Trust, LLC filed for Chapter 11 bankruptcy on August 14, 2023, following financial difficulties, a cease and desist order, and a terminated acquisition deal with BitGo.
Prime Trust, LLC, has found itself at the centre of a complicated financial and legal scenario. On August 14, 2023, the business and a few of its affiliates voluntarily petitioned the United States Bankruptcy Court for the District of Delaware for Chapter 11 bankruptcy protection.
The filing is the result of a sequence of occurrences that started in early June 2023, when rumours about Prime Trust's bankruptcy started to spread. Nevada's Department of Business and Industry issued a stop and desist order on June 21 due to the company's "critically deficient" financial state and unable to honour client withdrawals, which exacerbated the problem.
When BitGo, a digital asset custodian, stated on June 22 that it was terminating its takeover of the firm, Prime Trust's problems only became worse. Banq, the payments division of Prime Trust, filed for bankruptcy in the US a few days before to this ruling, reporting $17.72 million in assets and $5.4 million in liabilities.
The petition from the Financial Institutions Division of the state was approved on July 14 by the Eighth Judicial District Court of Nevada, putting Prime Trust under receivership. The court-appointed receiver was given the responsibility of monitoring the day-to-day operations of the corporation, and a hearing has been set for the 22nd of this month to assess whether or not this decision will be permanent.
The Chapter 11 application by Prime Trust is a part of a larger plan to assess all strategic options, including perhaps selling the business's assets and operations as a continuing concern. The business is certain that this procedure will provide a clear and value-maximizing route for the gain of its stakeholders and clientele.
The current Prime Trust incident serves as a stark reminder of the complex difficulties encountered by businesses engaged in the quickly developing rypto custody sector. Additionally, it emphasises the significance of regulatory compliance and possible hazards related to the developing bitcoin industry.
The restructuring website for Prime Trust or PACER both provide further information about the court-supervised processes. The issue is still in flux, and how the legal processes turn out will probably have a big impact on Prime Trust's customers, stakeholders, and the larger digital asset market.
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