Mode Eleven Bancorp, the Wyoming-based holding company for Summit National Bank, has filed for Chapter 11 bankruptcy protection and is seeking court approval for an expedited sale process, warning that regulatory action could result in the closure of its community bank within months.
The company filed its bankruptcy petition on June 9, 2025, in the U.S. Bankruptcy Court for the District of Wyoming (Case No. 25-20240) and is now requesting approval of bidding procedures that would compress the typical sale timeline due to what it describes as "near-term risks" from banking regulators.
According to court documents filed June 18, Summit National Bank is operating "well below the minimum 13% capital ratio" required under a consent order with the Office of the Comptroller of the Currency. More critically, the company projects that one of the bank's key capital ratios will fall below 2% within months—a level that would require the OCC to close the institution.
"The Debtor lacks sufficient liquidity to inject funds to allow the Bank to satisfy the capital ratio required by the OCC Consent Order," the company stated in its filing, describing the bank's equity interests as a "melting ice cube" where value could be rapidly destroyed by regulatory action.
Regulatory Enforcement Actions Drive Bankruptcy
The bankruptcy filing comes after a series of regulatory setbacks that derailed the company's efforts to diversify beyond traditional community banking. In 2021, CEO Forrest Gilman launched an ambitious fintech division offering banking-as-a-service platforms, digital asset custody, and compliance management services.
However, regulatory scrutiny intensified after a September 2023 Federal Reserve inspection identified deficiencies in board oversight, capital management, liquidity, and compliance. The company was forced to unwind its fintech operations by February 2024 and entered into consent orders with both the Federal Reserve in March 2024 and the OCC in June 2024.
The regulatory pressure has created an urgent timeline for any potential sale. The company warns that supervisory actions could include cease and desist orders, civil penalties of up to $1 million per day, or appointment of the FDIC as receiver to liquidate the bank—actions that could occur "at any time without prior notice."
Marketing Process Underway Despite Compressed Timeline
Despite the time constraints, Mode Eleven has retained boutique investment bank Hovde Group to conduct the sale process and has already generated significant interest from potential buyers. According to Kirk Hovde, who is leading the sale effort, nine parties entered into non-disclosure agreements before the bankruptcy filing, including two banks and a credit union.
Since the petition date, an additional ten potential buyers have signed or are expected to sign confidentiality agreements, including "several state-chartered banks with, in aggregate, over $6 billion in assets and capital." Hovde is reaching out to more than thirty financial institutions total, many of which would face reduced regulatory scrutiny as existing bank charter holders.
The proposed sale timeline calls for indications of interest by July 11, binding bids by July 25, a potential auction on July 28, and a sale approval hearing on August 4. While compressed compared to typical corporate sales, Hovde notes that similar bank transactions typically proceed on five-to-seven week timelines, making the ten-week marketing period reasonable for the industry.
Community Banking Franchise at Stake
Summit National Bank, originally chartered in 1984 as Hulett National Bank, provides community banking services in rural markets across Salmon, Idaho; Ekalaka, Montana; and Hulett, Wyoming. The institution also operates a processing center in Laurel, Montana.
The potential loss of the banking franchise would impact the rural communities served by Summit National Bank, which the company notes as one of the stakeholder groups that could benefit from a successful sale to a well-capitalized buyer.
Mode Eleven attempted to raise capital through a private placement offering in December 2024, seeking between $10 million and $20 million in exchange for voting and non-voting common stock. However, the offering failed to reach its minimum capital requirements and was terminated by the board of directors on April 8, 2025.
Sale Structure and Protections
The proposed bidding procedures would allow Mode Eleven to designate a stalking horse bidder and offer bid protections of up to 3% of the purchase price, including both breakup fees and expense reimbursements. The company reserves the right to accept bids for all assets or subsets thereof, with the goal of maximizing value for the estate.
Any successful sale would require regulatory approval for the transfer of the bank's ownership, adding another layer of complexity to the already compressed timeline. The company emphasizes that identifying "a financially capable buyer with the ability to obtain regulatory approval" is critical to preserving value for all stakeholders.
The case is being handled by Covington & Burling LLP, with Abigail V. O'Brient seeking pro hac vice admission, and local Wyoming counsel Markus Williams Young & Hunsicker LLC, represented by Bradley T. Hunsicker.
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