Mt. Gox files for Chapter 15 in U.S.

[mgroenouwe]

http://www.marketwatch.com/story/mt-gox-files-for-chapter-15-in-us-2014-03-10?mod=BreakingNewsMain&link=sfmw

NEW YORK (MarketWatch) -- The bitcoin exchange Mt. Gox filed for Chapter 15 in the U.S. on Sunday, a chapter of the bankruptcy code that is designed to facilitate dealing with insolvency cases with parties in more than one country. Mt. Gox, which is based in Tokyo, filed for bankruptcy in Japan on Feb. 28. Meanwhile, the blog of Mt. Gox Chief Executive Mark Karpeles has been reportedly hacked , with the hackers posting an alleged balance sheet of the exchange's accounts.

[btc237ftw]

They filed for "bankruptcy protection" not "bankruptcy". Anyway, what is this chapter 15?

[mdude77]

They filed for "bankruptcy protection" not "bankruptcy". Anyway, what is this chapter 15?

https://en.wikipedia.org/wiki/Bankruptcy#Chapters

I suspect they are the same.  "We don't have the money to pay our debts, the state will protect us and help us clear our debts.  Sorry debtors."

Something like that.

M

[btc237ftw]

and helps foreign debtors to clear debts.

sounds like more evidence for Gox restructuring and relaunching some time in the future

[mdude77]

and helps foreign debtors to clear debts.

sounds like more evidence for Gox restructuring and relaunching some time in the future

I would hope that people will steer clear of them... but greed rules in the world of bitcoin, so chances are "investors" will flock back.

M

[Definit]

https://en.wikipedia.org/wiki/Chapter_15,_Title_11,_United_States_Code

Chapter 15, Title 11, United States Code is a section of the United States bankruptcy code that deals with jurisdiction. Under Chapter 15 a representative of a corporate bankruptcy (insolvency) proceeding outside the U.S. can obtain access to the United States courts. It allows cooperation between the United States courts and the foreign courts, as well as other authorities of foreign countries involved in cross-border insolvency cases.

It happens with increasing frequency that a bankruptcy proceeding in one country has a connection to assets or information located in another. Because of the involvement of multiple jurisdictions, unique problems arise. In order to solve some of these problems, the United States enacted Section 304 of the U.S. Bankruptcy Code in 1978. Section 304 was repealed in 2005 and replaced with Chapter 15, titled "Ancillary and Other Cross Border Cases." This section has increased the range of options available in the United States in support of foreign bankruptcy proceedings.
UNCITRAL[edit]

Chapter 15 incorporates the Model Law on Cross Border Insolvency drafted by the United Nations Commission on International Trade Law. The law provides solutions to problems which arise in connection with cross-border bankruptcy, allowing US courts to issue subpoenas, orders to turn over assets, the issuance of stays on pending actions, and orders of other types as circumstances dictate. The ancillary proceeding permitted under Chapter 15 is often a more efficient and less costly alternative to initiating an independent bankruptcy proceeding in the United States. It also avoids the conflicts which could arise between the jurisdictions involved in two independent bankruptcy proceedings initiated in connection with the same debtor.
Chapter 15 also establishes mechanisms for the cooperation between US and foreign courts and representatives regarding proceedings which involve the same debtor.
Discretionary assistance[edit]

Whether the US courts will extend the "additional assistance" sought in connection with a foreign proceeding under Chapter 15 is a matter of discretion.
The main consideration the US courts will take into account in making this decision is whether the laws of the foreign jurisdiction in connection with which the additional assistance is sought violate the laws or public policy of the United States and if the foreign courts conduct their proceedings according to basic rules of procedural fairness.
Among other factors the US courts will consider how the foreign jurisdiction treats creditors, whether it prevents the fraudulent transfer of debtor's property, if US creditors are protected against prejudice in the processing of their claims there, and the manner in which assets are distributed.
The court may conduct an evidentiary hearing, including the hearing of expert testimony, to determine whether the proceedings of the foreign forum are sufficiently just to grant the assistance requested.
Original Chapter 15 (1978-1984)[edit]

The original 1978 Bankruptcy Code had a different Chapter 15 dealing with the United States Trustee Program, which it established as a trial in some judicial districts to assume roles which formerly belonged to the bankruptcy judge and others, including the selection and oversight of private trustees in individual cases. At that time, the other chapters of the Bankruptcy Code described how bankruptcy worked in districts without United States Trustees; original Chapter 15 modified the text of the other chapters for districts with United States Trustees. Section numbers in original Chapter 15 incorporated the section numbers in the main Code that they modified; for example, section 151325 (a section of original Chapter 15) modified section 1325, which sets the requirements of Chapter 13 plans.
Since the trial program was considered a success, Congress in 1984 ordered the creation of United States Trustees in all states except Alabama and North Carolina. Since original Chapter 15 now applied in most states, its text was then merged into the main Bankruptcy Code; separate provisions were enacted for Alabama and North Carolina, where other officers of the court assume the role of the United States Trustee.

[Definit]

http://www.coindesk.com/mt-gox-files-chapter-15-us-bankruptcy-protection/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CoinDesk+%28CoinDesk+-+The+Voice+of+Digital+Currency%29

Troubled Japan-based bitcoin exchange Mt. Gox has filed for Chapter 15 bankruptcy protection, an ancillary form of bankruptcy that will complement its primary Tokyo District Court claim issued on 28th February.

US Chapter 15 bankruptcy provides specific protections in cases of cross-border insolvency, and is based on UN model law. Both Japan and the US have adopted Chapter 15 bankruptcy in an effort to better protect the interests of shareholders and maximize the value of debtor assets in cross-border bankruptcies.

At the time of its filing, Mt. Gox claimed an outstanding debt of ¥6.5bn ($63.6m), and indicated that 850,000 bitcoins had been lost or stolen from its exchange.

This is just the latest development in the ongoing legal case against Mt. Gox. Shortly after its original Japan filing, a US class action suit was mounted by Colorado-based Edelson law firm, which specializes in technology cases. The lawsuit is seeking damages, alleging that Mt. Gox was negligent for failing to provide adequate security to its customers.

Edelson did not respond to comments requesting more information on how this filing could affect its case.

What is Chapter 15 bankruptcy?

Upon qualifying for Chapter 15 protection in the US, certain relief could become available to Mt. Gox, including the granting of an “automatic stay” that would prevent creditors from seizing its US assets, though Mt. Gox would have to request such an arrangement in writing. The presiding bankruptcy judge would have the final say on granting the relief.

For more information on Chapter 15 bankruptcy filings, read a full overview here.

Next steps

Following the filing, a recognition hearing will typically be held within 30 days to determine whether the case is a “foreign main” or “foreign non-main” proceeding, distinctions that would affect the handling of the case. Mt. Gox may not necessarily have protection in the interim period before the hearing.

After the determination is made at the hearing, Mt. Gox would be able to carry out its main purpose in filing, which can include liquidating assets, approving its sale or assigning its leases in the US.

Mt. Gox indicated recently in a post on its website that it planned to restructure and restore the business in order to increase repayments to its creditors.