Yesterday, U.S. Bankruptcy Judge Stacey Jernigan of the U.S. Bankruptcy Court, Northern District of Dallas ordered Mark Karpeles back to the U.S. in order for his bankruptcy application to proceed. He needs to appear on April 17 at the offices of his legal representatives in Dallas, Baker & McKenzie.
“If he avails himself of this court, my God, he is going to get himself over here”, said Judge Jernigan. Upon a suggestion from Karpeles’ legal team that Karpeles should be replaced and designated as “foreign representative” of MtGox, whereby his input will take the form of deposition from Taiwan, she responded, “He filed this case”.
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Chapter 15 Bankruptcy in the U.S. is not necessarily automatic; justification is generally required to prove the need for protection. Here, the bankruptcy protection sought can directly undermine the current class-action lawsuit by MtGox customers against Karpeles.
Plaintiffs want Karpeles present so that he can supply insight into what exactly happened to the over 750,00 coins and millions in fiat in his care. He had sole control and visibility into the company’s financial records. Curiosity has piqued further since reports of Karpeles using client holdings to fund company operations emerged on Reuters. Others have alleged that he and other insiders have stolen the funds.
Chapter 15 was only added into the Bankruptcy code in 2005. It allows foreign debtors to access U.S. Bankruptcy courts, and is the U.S. adoption of the United Nations Commission on International Trade Law (“UNCITRAL”) which deals with international bankruptcy.