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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 to pay creditors back about 25% of the bitcoin they are owed. Under bankruptcy, the original valuation is binding, so the extra funds over the amount required to repay creditors at 50,058 JPY/BTC will go to former Mt.Gox CEO Mark Karpeles. Mark is also in personal bankruptcy, it’s not clear how much of the over $1 billion “surplus” he will actually get.
We believe this is unjust and are seeking to get a distribution closer to the 25% that is possible using the currently held bitcoin. 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, our lawyer (Sekido) and Fujuoka are currently working to convince the court to proceed with CR. The Mt.Gox trustee (Kobayashi) is currently considering moving to CR. Mr. Kobayashi has indicated that he is not opposed to CR, but he is cautious because it may represent a liability for him.
The lawyers representing the creditors (Sekido & Fukuoka) need to aid Kobayashi in finding a way to legally navigate the seemingly contradictory requirements that (1) in CR all creditors must be treated better than in bankruptcy and (2) all CR all creditors must be treated equally. There’s a contradiction because both (BETTER) and (EQUALLY) must be met in CR. If bitcoin claims are revalued and repaid at 25%, it will be much better for claimants who are owed bitcoin, but treating people with fiat claims equally would mean they are worse off because, instead of receiving 100% of their claim under bankruptcy, they would only receive 25% under CR. One workaround is to give choice to every creditor: either accept the bankruptcy rules and valuation or CR rules and valuation.
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. However, it is not yet clear whether claims collected by the trustee can be taken over 1:1 in order to speed up the process.
At the moment, we are mainly discussing:
- How to allocate the available funds to Fiat and Bitcoin creditors 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