E-gold is a bankrupt. What is going on?

About 1PM New York time in the newsfeed of Google News appeared a press release with a link to http://www.newsguide.us/business/e-commerce/E-gold-Ltd-and-Gold-Silver-Reserve-G-SR-Inc-bankruptcy-announcement/, published on behalf of the owners of E-gold Ltd. and Gold & Silver Reserve (G&SR), Inc. In the text Chairman of E-gold Douglas Jackson and Director Barry K. Downey have made an announcement that on July 7, 2008 the companies E-gold Ltd. and Gold & Silver Reserve were declared bankrupt.

From that moment, following the Bankruptcy Code (Title 11, United States Code) a bankruptcy process, regulated by Chapter 7 of Bankruptcy Code will start. According to that chapter the trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of article 726. The assets excluded from the bankruptcy assets and obtained by the debtor after the beginning of the bankruptcy proceeding are not included.

What's the drift of all this?

Judging by the issued release one can draw a conclusion that E-gold payment system has ended its existence and waits only for the procedures dept discharge. According to the statement of Douglas Jackson, Chairman of E-gold, the registered capital of the company is $20000 and the property of E-gold is presented by the computers and the office furniture, thus, one can conclude that the accountholders of the system will get any compensation neither from E-gold Ltd. nor from Gold & Silver Reserve (G&SR), Inc.

What consequences can be expected from the E-gold’s composition in bankruptcy?

One can suppose that composition in bankruptcy will result in rapid drop of e-gold currency liquidity and further waiver of this currency. In the near term we can expect a sharp unload of the currency to the exchange services of the Internet, and also the concentration of e-gold in a limited number of the exchangers which will meet the heavy losses due to the bankruptcy of e-gold.

However, we should wait for the next statements of Douglas Jackson and Barry K. Downey who will probably determine the exact terms of company shut down and the ending of the bankruptcy procedure.

Finally, Douglas Jackson has made an official statement on e-gold's official blog. The official has scotched rumours concering their bankruptcy. More information is available here:

http://ecommerce-journal.com/news/e_gold_is_a_bankcrupt
http://blog.e-gold.com/