How Much Exposure Does Your Precious Metals Refiner Have in the Republic Bankruptcy?

When the news came out that Florida gold and silver refinery Republic Metals Corp. had filed for bankruptcy, many were surprised to find so many other companies that hold themselves out as “gold refiners” listed on the petition as unsecured creditors. Equally jaw-dropping were the amounts Republic said it owed these companies:  millions of dollars that the “refiners” may never see any part of.

And the news hasn’t gotten any better since. Asahi reportedly won the auction to purchase Republic’s facility for $26 million, which is dwarfed by Republic’s more than $175 million in secured debt – leaving little if any left to pay any unsecured creditors.

(Pease & Curren has no exposure to the Republic bankruptcy and we were surprised to see so many of our competitors on this list.)

It turns out that the amounts listed on the petition may have just been the tip of the iceberg. As the bankruptcy litigation proceeds in the Southern District of New York, court filings have revealed even greater potential losses for many of these companies. A fuller picture of these refiners’ losses is shown below in Figure 1.

Executive Summary

  1. The Republic Metals Corporation bankruptcy has affected many businesses that hold themselves out as precious metals or gold refiners. These businesses may ultimately lose significantly more money than they were listed as being owed in Republic’s original petition.
  2. Companies, including many “refiners”, that received payments from Republic in the 90 days prior to Republic’s bankruptcy may be liable to return some of the money they received.
  3. It is important to do business with a financially secure precious metals or gold refiner.


Figure 1.

Figure 1 Legend and Assumptions: The second column from the left is the amount Republic said it owed each refiner in its initial bankruptcy petition, filed in November. The “Physical Inventory” column lists the amount of physical inventory Republic said that it has on hand that had been earmarked for a specific customer but not delivered to them. The “What They Say They Are Owed” column are the refiners’ positions on how much they are owed, and are reflected in various filings and demand letters presented to the bankruptcy court. “Amount Received <90 Days Before Bankruptcy” reflects the amounts received by the refiner from Republic within the period of time that the law views as suspect (more information below in the “Claw-Back Litigation section”). “Total Known Potential Exposure” represents a combination of the above numbers. Sometimes the amounts owed were expressed in quantities of precious metals, and we reduced these to dollars for the purposes of clarity, using the second London fix on February 12, 2019.


We now believe that the losses listed in the initial bankruptcy petition from November 2018 referred only to monies tied up in consignment accounts held with Republic, and did not capture the full extent of Republic’s creditors’ losses. Companies who did business with Republic may lose more money in the form of lost physical inventory and in claw-back litigation.

Of course, Pease & Curren did not do business with Republic and draws all of its knowledge from publicly available sources, primarily court filings. We do not claim any special knowledge of any other precious metal refiner’s situation.

Gold Refiners Could Get Hit With Claw-Backs
Precious Metals Refiners that received payments from Republic within 90 days of its bankruptcy may have funds clawed back.

Claw-Back Litigation: The law views transactions completed just before a bankruptcy as inherently suspect. The Bankruptcy code at 11 U.S.C. section 547 provides that money dispersed by a debtor 90 days before a bankruptcy filing may be “clawed back” from the recipient so that the funds can be spread among the creditors. Republic recently filed a list of parties it had paid within the last 90 days, and it appears that many refiners on the unsecured creditors list could be receiving claw back lawsuits in the near future. This does not mean that each refiner will have to pay back the entire amount that it received. Payments that were made for metals recently shipped are safer than those made to cash out metals held for a long time in a pool account.

Physical Inventory Losses: After initially declaring bankruptcy, Republic subsequently filed schedules showing the amounts of physical metals in its facility, either refined or in the process of being refined at the time of the bankruptcy. Republic’s senior lenders contend that they have the right to be paid out first from these metals, because they are first in line to receive any proceeds from Republic’s assets. The companies that shipped their metals say they should be returned, as they never lost ownership of the metals that they did not receive payment for.

Gold Refining Industry Ripple Effect?
Republic’s Bankruptcy Could Cause a “Ripple Effect” in the Precious Metal/Gold Refining Industry


Choosing a refiner is a lot like choosing a bank – you can lose a lot of money if it has financial problems or goes under. Except that precious metal/gold refiners do not have the FDIC insurance program to bail them out if they experience losses. As we have seen, refiners are not seen as “too big to fail” and Uncle Sam will not step in to make creditors whole.

Even if your precious metal/gold refiner is on this list, and has not gone bankrupt or had trouble paying you, that does not mean that trouble is not waiting down the road. In a Federal lawsuit recently filed in Florida against Republic insider Lindsey Rubin, Republic’s creditors claim that Republic was actually insolvent all the way back in 2012! So how did it survive until late 2018? The answer is probably that these precious metal/gold refineries hold a lot of other people’s money. Even after suffering catastrophic losses, refiners may be able to survive for months or years by using the money they are holding to operate.

Pease & Curren has been in business for more than a century because we have adopted a conservative, financially prudent approach to doing business. If everyone called us on the same day to ask to be paid for the metals we are holding for them, sufficient funds would be readily available. How many banks can say that? When you choose Pease & Curren you are not only choosing to get a great return, you are choosing peace of mind.


We posted initial information on the Republic bankruptcy here, answered some frequently asked questions here, and discussed the business’s auction and potential claw-back litigation here.


Frank Curren

Before joining Pease & Curren, Frank Curren graduated from Georgetown Law and worked for a Boston based non-profit, focusing on litigation between debtors, creditors, and debt collectors.

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