The Tokyo District Court on Friday accepted a motion to end the bankruptcy of Mt. Gox, once the world’s largest Bitcoin trading venue, and move the now-defunct exchange into civil rehabilitation.
The ruling halts payments or distribution of Mt. Gox’s “enormous assets” to shareholders for the time-being, which instead will be returned to creditors under rehabilitation proceedings.
Daniel Kelman, a New York-based lawyer who is in charge of forming a rehabilitation group, said, however, that creditors’ victory has not been realized yet and it will only come when Mt. Gox makes payment and “creditors actually receive such payment.” Kelman hopes the process will end up distributing the bitcoins after all.
The civil rehabilitation is not likely to be used to resuscitate Mt. Gox business but rather as a more flexible form of bankruptcy. It also allows the trustee to create his own plan instead of following a rigid set of steps under the bankruptcy proceedings. And most importantly, the bitcoin claims will be able to be revalued – hopefully in bitcoin this time.
TrustedBrokerz: The Source More Traders Are TrustingGo to article >>
According to Mr. Kelman, the creditors will get to vote on this plan. He further explained: “To that end, a rehabilitation plan to certainly and promptly realize creditors’ rights should be prepared, approved at the creditors’ meeting, and approved by the court. A rehabilitation plan, which provides creditors rights in the proceedings, will be primarily prepared by the trustee; therefore, creditors’ opinions will not always be reflected to the rehabilitation plan prepared by the trustee.”
Against interests of the shareholders
Mt. Gox went offline in 2014 in the single biggest setback in the history of Bitcoin after 850,000 bitcoins were stolen in a hacking attack. Under suspicious circumstances, the Japanese exchange claimed it had lost track of about 750,000 bitcoins belonging to customers and another 100,000 of its own, but later said it had found 200,000 bitcoins.
Those assets, currently valued at $1.13 billion, was supposed to be distributed to shareholders as part of the liquidation. This is because the value of creditors’ claims is calculated in the exchange rate between Bitcoin and the Japanese yen on the bankruptcy date in April 2014, instead of current rates.
However, the rehabilitation ruling isn’t in the financial interest of the shareholders. Mt.Gox has two shareholders, Tibanne and Jed McCaleb. The Tokyo-based exchange is 88-percent owned by Tibanne, of which Karpelès is the sole owner. The remaining 12 percent are held by Mt. Gox’s original creator Jed McCaleb, a San Francisco-based programmer who currently works with Stellar.
Earlier in March, the court-appointed trustee in Mt. Gox’s bankruptcy, Nobuaki Kobayashi, sold nearly $400 million worth of Bitcoin and Bitcoin cash to generate proceeds to pay back creditors. At the time, cryptocurrency traders blamed the sale of Mt. Gox’s holdings for negatively impacting Bitcoin’s price.