Denver-based Colorado National Bancorp on Nov. 9 filed for Chapter 11 bankruptcy protection.
The holding company of Colorado National Bank had lost a collection action initiated by the holders of promissory notes and was ordered to pay a principal amount of $4.01 million, plus $210,534.02 in interest and $29,320.11 in fees and costs. Bankruptcy protection will allow Colorado National Bancorp to ensure that its equity interests — the 100% of the bank's capital stock owned by the company — are sold instead of seized.
The company had been considering its strategic options since 2015. The noteholders in December of that year suggested a reorganization/recapitalization, which the board rejected because of its breakup fee and execution risks. In January 2016, the board engaged the services of Atlantic Merchant Capital Advisors LLC to solicit offers. A number of the potential partners declined to participate due to regulatory uncertainty or the limitations on the bank's Small Business Administration lending capabilities. A few proposals were received, including one with a $3.0 million purchase price. The noteholders rejected that offer in April.
In July, Colorado National Bancorp received a stalking horse bid, offering to buy 100% of the bank's stock for cash at tangible book value. Under the agreement with Marks Moskvins and Maksims Jarosevskis, they, as stalking horse bidders, may be entitled to a $250,000 breakup fee and up to $250,000 in expense reimbursement should a competing bid win the auction.
The bank itself is under "no financial difficulties" and "will continue to operate without interruption," BusinessDen.com reported Nov. 10, citing Colorado National Bank President John Sprengle.
