Silverbird enters administration / liquidation

[uk29]

Thankfully, I never completed the signup process with Silverbird but thought I’d share the email that I’ve just received from them.

Dear Customer,



Further to the email sent to you on 11 March 2024, please take note of the following important update:



Daniel Conway and Geoff Rowley of FRP Advisory Trading Limited were appointed the Joint Special Administrators (“JSAs”) of Silverbird Global Limited (“the Company” or “Silverbird”) on 13 March 2024.

Only limited information is available at this early stage of the Special Administration. Our initial actions will be to secure the assets of the Company, including securing all customer safeguarded funds.



Whilst every effort will be made to return funds to customers as soon as possible, it will firstly be necessary for the JSAs to secure control of all relevant information, reconcile balances and/or establish customer entitlements, ensure that the necessary due diligence and know your customer (KYC) information is present, current and correct, and follow the prescribed statutory distribution process. Unfortunately, customers will not have access to their funds while this work is undertaken.



In the Frequently Asked Questions (“FAQs”) below you will find answers to some of the questions you may have. For any other questions or concerns, please do not hesitate to contact the customer support team on [email protected] in the first instance.



The JSAs’ team can be contacted by emailing [email protected].



Being Alert to Scams:

All customers should remain alert to the possibility of fraud. If you are cold called by someone claiming to be from Silverbird, FRP Advisory or the FCA and are suspicious about the caller’s identity, please end the call and call back using the phone number on their website. More information about this can be found on the FCA website at https://www.fca.org.uk/consumers/protect-yourself-scams.

​

FREQUENTLY ASKED QUESTIONS (“FAQs”)

This document, and all other documents relating to the Special Administration, are available for viewing and downloading at the website http://creditors.frpadvisory.com. You can log in to the website using the following credentials:



Case code: S3500LON selected from the drop-down list that appears

Password: S3500LON



These documents include a notice, prepared in accordance with Rule 260 of the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021, which states that all future notices or other documents in the Special Administration will be made available for viewing and downloading on that website without further notice to you, and the Joint Special Administrators will not be obliged to deliver, give or send any such notices or other documents to you unless they are requested by you. You may request a hard copy of any of those notices or documents by contacting us by email at [email protected], by telephone at +44 (0) 20 3005 4000, or by post at 2nd Floor, 110 Cannon Street, London EC4N 6EU.



Frequently Asked Questions

​

1. What is a Special Administration?​

​

1. The Payment and Electronic Money Institution Insolvency Regulations 2021 (“Special Administration Regulations”) were introduced to improve the process where a payment services or electronic money institution fails.​

A Special Administration is similar to an ordinary administration; for example, it is subject to the supervision of the English High Court in London.



However, some of the key differences are detailed below. The Joint Special Administrators (“the JSAs”) have to pursue three objectives:

​

• To ensure the return of relevant funds as soon as is reasonably practicable;​
• To ensure timely engagement with payment system operators, the Payment Systems Regulator and the FCA; and​
• To rescue the institution as a going concern or to wind it up in the best interests of the creditors.​

There are a number of specific requirements in a Special Administration. One of the JSAs’ initial actions is to secure, quantify and reconcile the customer funds (also known as “relevant funds”) held by the Company and establish each customer’s claim against this pool of funds. Following this, the JSAs will follow the statutory process to enable the distribution of these funds to customers.



By law, the costs and expenses incurred returning relevant funds to customers are to be paid out of those relevant funds. Other costs and expenses of the Special Administration are paid out of the Company’s own assets.

​

1. Why has Silverbird entered Special Administration?​

​

1. Silverbird has been reliant on raising funds through new and existing shareholders and investors in order to grow its business and finance its operations. The Company has attempted to raise further funding over the past few months but these efforts have not been successful. A recent review of the financial position of the Company by its directors has identified that the business is insolvent, and it therefore ceased to undertake further regulated activity on 11 March 2024. Due to the nature of the Company’s business, a Special Administration is the most appropriate insolvency procedure.​

​

1. Is Silverbird still trading?​

​

1. No. The Company ceased all regulated activity on 11 March 2024 and all customer safeguarded funds were frozen at that point in time.​

​

1. I am a safeguarded e-money customer of Silverbird. Will I get my money back?​

​

1. In the short term, you will not be able to transfer or otherwise use your funds held with Silverbird – they are effectively frozen. The JSAs recognise that this may be a difficult position for customers to be put in. One of the JSAs’ key objectives is to resolve this as quickly as possible. The JSAs will take control of all safeguarded funds and establish the amount of customer claims/entitlements. In the longer term, a plan will be developed to return the safeguarded funds to customers. Further details on this are set out below.​

We are currently unable to provide any further details on possible timings or the amount of any distributions. We will update customers and creditors in due course.

​

1. Do I need to make a formal claim?​

​

1. Yes, you will need to make a claim into the Special Administration. There will be a claims notification process in which we will write to all customers and creditors. We will be in contact about this in due course.​

In the meantime, should you wish to submit a claim in advance, you can download a claim form by going to the website http://creditors.frpadvisory.com and entering the following credentials:



Case code: S3500LON selected from the drop-down list that appears

Password: S3500LON



Once completed and signed, you can email your claim form to us at [email protected]. Please note there are separate claim forms for customers and creditors (explained further below).

​

1. Am I a customer or a creditor?​

​

1. We classify customers as those who used Silverbird’s electronic money services. We classify creditors as suppliers of the business (for example IT suppliers, landlords and employees).​

​

1. Are my funds protected by the FSCS?​

​

1. No. The Financial Services Compensation Scheme (FSCS) only applies to certain types of activity. This does not include electronic money or payment services. Further details of what is covered by the scheme can be found at https://www.fscs.org.uk/.​

Under the Electronic Money Regulations (EMRs), there are requirements on how customers’ money should be protected, and these requirements are known as ‘safeguarding’.

​

1. How did Silverbird protect my funds?​
2. When Silverbird provided regulated electronic money services it was required to hold money separately for those customers. These safeguarding requirements apply to Silverbird and the firm must comply with them at all times.​

Safeguarding is a key consumer protection measure within the EMRs. The purpose of safeguarding is to protect customer funds if a firm fails.

The JSAs will carry out an assessment of all the customer funds held by the Company to confirm the current position. Subject to this review, we understand from Silverbird’s management that all customer monies have been properly safeguarded.​

1. Will I receive back all of my customer funds?​

​

1. It is not certain at present to what extent, and when, safeguarded funds will be returned. This is dependent on, amongst other things, the extent of any shortfall in safeguarded funds identified and the quantum of costs and professional fees associated with distributing the safeguarded funds back to customers.​

​

1. Who is regulating the current activities being carried out by the Joint Special Administrators?​

​

1. The JSAs are performing their duties in line with the Special Administration Regulations (and associated Rules). As part of this, the JSAs are and will be in regular communication with the FCA in relation to the strategy and progress of the Special Administration. The JSAs are regulated by either the Institute of Chartered Accountants in England and Wales or the Insolvency Practitioners Association. The Special Administration is subject to the oversight of the High Court of Justice of England and Wales.​

It should be noted that Silverbird remains authorised by the FCA and remains subject to the FCA’s rules.

​

1. When will I hear further from the Joint Special Administrators?​

​

1. The JSAs will correspond with all known customers in the coming days. All creditors (as distinct from customers) will also receive notification from the JSAs within 7 days of their appointment.​

​

1. Do I need to use a third party to get my money back? ​
2. If you are approached by a company offering to help you recover your money, you should proceed with caution. For the vast majority of the Company’s customers, there will be no benefit in involving a third party in making a claim.​

Being alert to scams



All customers should remain alert to the possibility of fraud. If you are cold called by someone claiming to be from Silverbird, FRP Advisory or the FCA and are suspicious about the caller’s identity, please end the call and call back using the phone number on their website. More information about this can be found on the FCA website at Protect yourself from scams.

 

[globalmerchant]

I recently created an account with them and wanted to start using it seriously (as they brand it for "high value" transactions and this is what I normally do). So far I've put only 10k eur there to test it, and spent around 1k for some random payments. So now I have 9k eur locked with them, and there is no clear timeline to get it back. Kind of sucks, but thank God that I have not started using it seriously or gave payment details to my customers etc. If they went bust couple days later, I would have given payment details to customers and potentially be very screwed now.

So I guess, now I will see how strong are the guarantees of EMIs about "safeguarding"...

However, if someone was using Silverbird seriously, they might have their company killed by this IMO. As the messaging looks like that unlocking funds will not happen within days.

 

[jafo]

Thankfully, I never completed the signup process with Silverbird but thought I’d share the email that I’ve just received from them.

Wow! I had NO idea. I just went to the site and saw their "notice"

I can't say this surprises me, though. Too much KYC and other BS.

Thank you for sharing!

 

[Javimetal]

I used Silverbird twice. After that, new payments were rejected and returned to sender, and then my balances blocked without reason. So I have 0€ there. Good luck in my case. I never understood their biz model

 

[globalmerchant]

Some update in case someone is interested in what happens when EMI goes bust:

1. My money that I mentioned in the earlier post is still blocked.

2. Liquidation of Silverbird is performed by some law firm, that is publishing various documents to read for customers who held money in Silverbird and creditors of the company (suppliers, employees etc.).

3. These documents required me to file a claim regarding my funds (file some form that they supplied). So I filed this claim. By the way: it was necessary to attach account statements to that claim, and when this requirement about statements was published, it was already impossible to log in to Silverbird. So, if you did not have up-to-date statements, I don't know how you were supposed to file this claim. Fortunately, I had statements, because I generated them immediately after they blocked transactions (and then, logging-in was still possible, just sending money was not possible; after couple days, logging-in became impossible).

4. It turns out that Silverbird was using two "banking partners": Currency Cloud and Banking Circle. And:
- Currency Cloud already allows to withdraw funds of former customers of Silverbird. So if you were lucky, and they had your account under Currency Cloud, you can withdraw funds now. Unfortunately I am not in this lucky group.
- Banking Circle does not offer this option, and messaging about Banking Circle in that law firm documents is as follows:

Whilst every effort will be made to return funds to customers as soon as possible, it will firstly be necessary for the JSAs to secure control of all relevant information, reconcile balances and/or establish customer entitlements, ensure that the necessary due diligence and know your customer (KYC) information is present, current and correct, and follow the prescribed statutory distribution process. Unfortunately, customers will not have access to their funds while this work is undertaken.

So we will see how it goes, I hope funds were properly safeguarded in that Banking Circle thing...

5. From some other documents from the law firm, it seems that this reconciliation of funds might take up to 2 months.

6. The girl who was my account manager in Silverbird responded to my Whatsapp (as contact method with their team was Whatsapp), saying that employees no longer work for Silverbird, and she is just checking this whatsapp "because she cares for customers", but generally don't know anything beyond what was published.

So, we will see how it goes. But if someone was relaying on Silverbird, they are screwed quite badly. And branding of Silverbird was as a serious financial provider for high value import/export transactions, the fees were high, and they required some turnover to avoid 200 eur fee per month for the account (if I remember correctly, 50k eur turnover per 3 months?). So, it made an impression of expensive, but solid company. I was very lucky that I have not started to use it as I planned, and my only exposure is that 9k eur that I mentioned in the earlier post.

 

[JohnLocke]

Thank you for your great insides.

You're definitely in a tough spot with the whole Silverbird thing coming apart. Not being able to get your hands on the latest account statements because you're locked out just adds to the headache. Lucky for you, you had those statements ready to go, but it's a pretty big miss for anyone who wasn't as prepared.

 

[Sols]

Sorry to hear you're caught up in this, @globalmerchant, but thanks for sharing!

You'll most likely end up getting all your money out. The process might take a few weeks or months, though. It depends on how effective the liquidator is and how bad the situation at Silverbird was before this happened.

 

[globalmerchant]

Another update from me, so there is some historical record on how it goes when EMI goes bust.

1. Still no money recovered for me since it was blocked in March (and as I wrote in earlier update, people whose Silverbird accounts were handled by Currencly Clound "under the hood", already recovered money long time ago, as Currency Cloud paid them. Unfortunately mine was under Banking Circle, which told me that they have no business relationship with me and won't help).

2. The law company that performs liquidation of Silverbird says that:

• One possible option of liquidation is some long legal procedure that should result in returning of customers funds in 8 months.
• They are trying to do another option, which should be quicker and result in returning funds in 3 months.
• Basing on information they have now, customers will get 85%-90% of their claims - so here goes the myth of "safe EMIs" which have everything safeguarded and you cannot lose money. Already there is discussion that at least 10-15% of money will be lost, and we will see how it goes at the end. Of course, the lucky people whose accounts were handled by Currency Cloud recovered all and are not participating in this - costs of liquidation and other remaining costs are paid by the unlucky ones.

 

[jafo]

Banking Circle, which told me that they have no business relationship with me and won't help)

Good to know they are POSs!

Thank you for sharing this with us!

 

[Sols]

Basing on information they have now, customers will get 85%-90% of their claims - so here goes the myth of "safe EMIs" which have everything safeguarded and you cannot lose money. Already there is discussion that at least 10-15% of money will be lost, and we will see how it goes at the end. Of course, the lucky people whose accounts were handled by Currency Cloud recovered all and are not participating in this - costs of liquidation and other remaining costs are paid by the unlucky ones.

While I'm sorry you're caught up in this, it will be very interesting to follow. AFAIK, it would be the first time an EMI is unable to meet its obligations. In addition to grounds to sue Silverbird and its directors, depositors might have grounds to sue the FCA for failing to ensure Silverbird was safekeeping client funds properly. Creditors can't lay claim to client funds, so if Silverbird are coming up short, they have been dipping into their client funds account for expenses or they have lost the money somehow, and the FCA failed to notice.

 

[jafo]

so here goes the myth of "safe EMIs" which have everything safeguarded and you cannot lose money.

Duuuuude... - You believed this?

Bruuuhhhh...when I was a kid at home, my OWN family would vote & RAID my piggybank! My piggybank's contents were the fruits of MY labor working odd jobs, e.g. cutting grass/mowing laws, washing and cleaning fishing boats when they came back, washing cars, feeding animals at the Zoo (Dierentuin they called it), cleaning the cages of these animals, tutoring other kids, etc. etc.
If they can, they WILL!

No scribbles with ink on some piece of paper are going to stop armed men from robbing us. What will stop them is if we are BETTER armed than them.

 

[ilke]

While I'm sorry you're caught up in this, it will be very interesting to follow. AFAIK, it would be the first time an EMI is unable to meet its obligations. In addition to grounds to sue Silverbird and its directors, depositors might have grounds to sue the FCA for failing to ensure Silverbird was safekeeping client funds properly. Creditors can't lay claim to client funds, so if Silverbird are coming up short, they have been dipping into their client funds account for expenses or they have lost the money somehow, and the FCA failed to notice.

The problem here is not with safeguarding, but that Silverbird was not the entity legally in charge of those funds.

AFAIK, the Banking Circle relationship in this case had Silverbird solely as a service provider, and Banking Circle as the actual entity in charge of the account. An EU bank has no requirement to hold full reserves - although it's still a bit strange that they wouldn't release the complete amount.

Basing on information they have now, customers will get 85%-90% of their claims - so here goes the myth of "safe EMIs" which have everything safeguarded and you cannot lose money. Already there is discussion that at least 10-15% of money will be lost, and we will see how it goes at the end. Of course, the lucky people whose accounts were handled by Currency Cloud recovered all and are not participating in this - costs of liquidation and other remaining costs are paid by the unlucky ones.

Currency Cloud is an EMI. People with Currency Cloud got the complete funds because Currency Cloud has to safeguard all funds.

However, Banking Circle is not an EMI. It's a Luxembourgish bank and has no requirement to safeguard all user funds. That doesn't say anything against the safety of EMIs but against banks.

IIRC, Silverbird was not safeguarding funds on its own. If it was, then there is a fault at the FCA for not making sure that Silverbird was safeguarding the total amount of user funds under its relationship with Banking Circle.

 

[globalmerchant]

Currency Cloud is an EMI. People with Currency Cloud got the complete funds because Currency Cloud has to safeguard all funds.

However, Banking Circle is not an EMI. It's a Luxembourgish bank and has no requirement to safeguard all user funds. That doesn't say anything against the safety of EMIs but against banks.

IIRC, Silverbird was not safeguarding funds on its own. If it was, then there is a fault at the FCA for not making sure that Silverbird was safeguarding the total amount of user funds under its relationship with Banking Circle.

I get what you are saying, but:
1. Silverbird was EMI as well (info about this is still available on their website, it says: "Silverbird Global Limited is an electronic money institution which is authorised and regulated by the Financial Conduct Authority ("FCA") under the Electronic Money Regulations 2011" - source Safeguarding - Silverbird ). Interestingly, on that page about "safeguarding", they are mentioning Currency Cloud and some bank, but there is no mention of Banking Circle (but maybe it was mentioned in fine print elsewhere).

2. Probably all EMIs are safeguarding in some kind of bank. So saying that this situation "doesn't say anything against the safety of EMIs but against banks" is IMO wrong. Customers put money into EMI and now they cannot recover it and most likely will not recover it in full. So this is very much about safety of EMIs, no matter if that EMI put customer funds into bank or sent to Nigerian prince, it's EMI who is failing obligation to customers to make the money available.

However, to me it seems that this Banking Circle is not necessarily fraud or does not have money or anything like that. I think that this 10-15% haircut will result from the costs of liquidation being paid from customers funds, as most likely there is no other money left in Silverbird elsewhere. And the only "dick move" from Banking Circle (comparing to Currency Cloud) is that CC repaid customers directly, while BC refuses to that, so costs of liquidation will be paid from customer funds held in accounts handled by BC.

But we will see how it ends. Because on less optimistic note, I've seen on the internet some high manager that worked firstly in Banking Circle and then Silverbird. So this might suggest that BC and S are more related than just being service providers and there might be some bigger mess under the curtain. Time will tell.

 

[ilke]

I get what you are saying, but:
1. Silverbird was EMI as well (info about this is still available on their website, it says: "Silverbird Global Limited is an electronic money institution which is authorised and regulated by the Financial Conduct Authority ("FCA") under the Electronic Money Regulations 2011" - source Safeguarding - Silverbird ). Interestingly, on that page about "safeguarding", they are mentioning Currency Cloud and some bank, but there is no mention of Banking Circle (but maybe it was mentioned in fine print elsewhere).

I'm aware that they were an EMI. But an EMI doesn't have to necessarily perform the activity itself - e.g. they find it difficult to open a safeguarding account, so they outsource the accounts to another firm and choose to only process payments (solely an example, there can be lots of scenarios).

2. Probably all EMIs are safeguarding in some kind of bank. So saying that this situation "doesn't say anything against the safety of EMIs but against banks" is IMO wrong. Customers put money into EMI and now they cannot recover it and most likely will not recover it in full. So this is very much about safety of EMIs, no matter if that EMI put customer funds into bank or sent to Nigerian prince, it's EMI who is failing obligation to customers to make the money available.

I understand your point. There are always banks that funds are safeguarded (or insurance policies protecting the funds, or high-liquidity low-movement funds) at if the money is held at the EMI. But safeguarding accounts aren't just normal corporate accounts. They aren't balances of the bank in the general way where they could lend funds out, invest them etc. And they can't be spent by EMIs while they are active. The literal only situation when a safeguarding account can have money taken out of it for operations is when there is nothing left in the company to liquidate.

The point I mention is that we are not aware of the agreement between Silverbird and Banking Circle. I'm not sure if Banking Circle offers safeguarding accounts, if its vIBANs had been connected to a Silverbird master account for their safeguarding, etc. Without that, it's hard to tell.

However, to me it seems that this Banking Circle is not necessarily fraud or does not have money or anything like that. I think that this 10-15% haircut will result from the costs of liquidation being paid from customers funds, as most likely there is no other money left in Silverbird elsewhere. And the only "dick move" from Banking Circle (comparing to Currency Cloud) is that CC repaid customers directly, while BC refuses to that, so costs of liquidation will be paid from customer funds held in accounts handled by BC.

You're right with that, it is the most likely scenario. I'd just add - if Silverbird had a safeguarding account at Banking Circle or Banking Circle managed only their vIBANs and clearing (and funds were moved to a Silverbird safeguarding account at another institution), Banking Circle would not have been able to pay out the customers directly. They can't touch safeguarding accounts in that way - and if funds aren't even held with them - then they obviously can't do anything.

Anyways, it is a very unfortunate situation. Not sure what the FCA is there for - so many restrictions issued all the time - but no ability to discover that Silverbird didn't safeguard enough - or didn't have any of its own capital above what was safeguarded.

 

[Forester]

Generally, this case is more than interesting.
(Of course, I would not like to be a Silverbird's customer.)

However, Banking Circle is not an EMI. It's a Luxembourgish bank and has no requirement to safeguard all user funds.

Of course – nevertheless Banking Circle is not in insolvency and there is (still ) no information that they have financial/liquidity problems. So this is probably not relevant.

BTW, I am recalling my debate with @Sols here Question - Wise (Revolut) Whats the benefit/cons? Should I have one? (and following).

However, to me it seems that this Banking Circle is not necessarily fraud or does not have money or anything like that. I think that this 10-15% haircut will result from the costs of liquidation being paid from customers funds, as most likely there is no other money left in Silverbird elsewhere.

That's it, I guess. Because the liquidation costs simply must be paid from some sources. Liquidators won't work for free. Definitely, the question is, whether the costs of their engagement are fairly as high as this 15%.

And the only "dick move" from Banking Circle (comparing to Currency Cloud) is that CC repaid customers directly, while BC refuses to that, so costs of liquidation will be paid from customer funds held in accounts handled by BC.

Well, this is strange a bit; but see below.

Because on less optimistic note, I've seen on the internet some high manager that worked firstly in Banking Circle and then Silverbird. So this might suggest that BC and S are more related than just being service providers and there might be some bigger mess under the curtain.

I second this, in such a case...

But an EMI doesn't have to necessarily perform the activity itself - e.g. they find it difficult to open a safeguarding account, so they outsource the accounts to another firm and choose to only process payments (solely an example, there can be lots of scenarios).

Sure. But I do not see this as changing the situation overall.

And they can't be spent by EMIs while they are active. The literal only situation when a safeguarding account can have money taken out of it for operations is when there is nothing left in the company to liquidate.

Exactly.
And I think that this can be the root of a problem.

The point I mention is that we are not aware of the agreement between Silverbird and Banking Circle. I'm not sure if Banking Circle offers safeguarding accounts, if its vIBANs had been connected to a Silverbird master account for their safeguarding, etc. Without that, it's hard to tell.

Sure, these details are undecryptable, for now.

if Silverbird had a safeguarding account at Banking Circle

As per the information available, it seems probable to me.

Banking Circle would not have been able to pay out the customers directly. They can't touch safeguarding accounts in that way

Why not? The Currency Cloud is doing exactly this – or do you think that the difference is caused by the fact that TCC itself is not the safeguarding institution but funds are safeguarded with other subject (to be honest, I do not know what bank TCC uses, and I wonder)? Well... that's possible.

- and if funds aren't even held with them - then they obviously can't do anything.

Sure.

Not sure what the FCA is there for - so many restrictions issued all the time - but no ability to discover that Silverbird didn't safeguard enough - or didn't have any of its own capital above what was safeguarded.

(Emphasis mine.) Nothing to add. If it is as it seems to be, shame on FCA, really.