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Contents
Summary
Under existing bankruptcy proceedings, creditors (i.e. former customers of Mt.Gox) claims were valued at 50,058 JPY/BTC (~465 USD/BTC). However, due to the rise in the value of the bitcoins held by the Mt.Gox estate, they have enough assets to pay creditors the full amount of their bankruptcy claim in Japanese Yen, several times over. Under bankruptcy (ie, the corporate liquidation that they’ve been in for years), the original valuation is binding, so the extra funds over the amount required to meet debts at the time of bankruptcy (50,058 JPY/BTC) could have gone to Mark Karpeles, as the majority shareholder.
Clearly this creates an unfair situation, and even Mark Karpeles believes that any surplus should go to creditors. However, this still needs to be done within the purview of Japanese bankruptcy law. Our lawyer (Sekido) is of the opinion that a “Civil Rehabilitation” (CR) offers the greatest prospect of success for us. Under CR the insolvent company (Mt. Gox) would be rehabilitated, but probably only for the purpose of distributing the funds to the creditors, not to revive Mt.Gox as a functioning exchange. Sekido believes that moving into CR would allow all claims to be revalued using BTC or today’s price of BTC.
A lawyer representing other creditors, Fukuoka, filed for CR, and a court-appointed examiner (Ito) has recommended CR. Now, Sekido and Fukuoka are working jointly to convince the court to proceed with CR. The Mt.Gox trustee (Kobayashi) also seems to favor civil rehabilitation as the way forward, although he’s been more cautious about moving in that direction than many would prefer.
The lawyers representing the creditors (Sekido & Fukuoka) have been working with Kobayashi in finding a way to legally navigate the seemingly contradictory requirements that (1) all creditors must be treated better than in bankruptcy and (2) all creditors must be treated equally.
If claims are revalued based on the increased value of bitcoin, and then all claims are repaid at 25%, then anyone with claims denominated in fiat would have done better under liquidation rules. On the other hand, if fiat claims are paid at 100% value and bitcoin claims are only paid at 20% value, that wouldn’t meet the equality criteria. One workaround is to give a choice to every creditor: either accept the full value of your claim under bankruptcy rules, or accept a partial valuation based on the updated price of bitcoin.
If the court decides to consider transitioning to CR, a plan must be developed that requires 50% of the creditors’ voting rights to be approved. The details of the plan are still being worked on, and many things are still undecided.
Moving to CR may require the claims submission process to be reopened. It’s expected that claims that have already been processed and verified will not need to be resubmitted, but we haven’t received any confirmation yet that this will be the case.
At the moment, we are mainly discussing:
- How to allocate the available funds to fiat and bitcoin claims at a later date
- How and whether to get the 50% of the votes together and what role fiat creditors (both depositors and others) play in this
- How to re-establish claims as quickly as possible
