If the total value of the backing drops below the total nominal value of the issued currency, then why anyone would ever bother to buy this one over a freshly created copy?  The latter always begins its life with full backing, and thus has a relative advantage over the former.  It seems to me that once this threshold is breached, the old currency will have to sell at a discount to compete with the new one, thus depleting the escrow fund until it's wiped out completely.  Notice that the old currency remains technically insolvent no matter how much buying the escrow fund does, and it can never eliminate the advantage that the new currency has over it.  Its demise is a certainty at this point.