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Investors and Creditors Unite in Push for Mt. Gox Revival

Piggy Bank
A group of Mt. Gox creditors have not given up on bold plans to revive the defunct bitcoin exchange. The creditors are already involved in two proposed class-action lawsuits against Mt. Gox and their lawyers claim to have reached a deal with US-based investors to prop up the exchange.Details of the proposed settlement were filed with a District Court in Chicago on Monday. Under the proposed agreement the creditors would get a 16.5% stake in the ‘new’ Mt. Gox, while the investor group, Sunlot Holdings, would take over the company.The lawyers are expected to present their case before a judge on Thursday, but hurdles remain.More approval necessarySince Mt. Gox is incorporated in Japan and Japanese authorities are overseeing the bankruptcy proceedings, they would also have to green light the proposed deal.In addition, the proposal is coming from US and Canadian creditors involved in the proposed class actions and it is unclear whether other Mt. Gox creditors around the world would agree to it.The hope is that the proposed deal would halt liquidation proceedings, which commenced last week. The whole process is expected to take several months and the first creditor meeting is scheduled for 23rd July, giving creditors ample time to put together their proposal and get the necessary support from fellow creditors, bankruptcy trustees and authorities.This is not exactly a new idea. Creditors and investors have been mulling similar initiatives for a while. However, none have yielded tangible results, at least not yet.In everyone’s interest?Sunlot Holdings has issued a statement arguing that a revival plan would help creditors get back more of their assets than a simple liquidation. The company’s chief executive John Betts also believes it would be a good move for the community in general, as it would send the message that bitcoiners look after their own.Sunlot Holdings also enjoys the support of Jed McCaleb, the original founder of Mt. Gox, as well as former Mt. Gox CMO Gonzague Gay-Bouchery. McCaleb already holds a 12% stake in the company, so he has a vested interest in putting Gox back on its feet.Creditors also stand to gain from the proposed deal. Liquidation can be a very lengthy process and would also derail the proposed class action suits.Jay Edelson, the lawyer behind one of the proposed class actions, told Market Watch that liquidation would “have been a disaster” for the class action, arguing:“It would have taken significant time, the assets would have been depleted, and the US consumers would have gotten pennies on the dollar.”Not giving upSunlot Holdings originally floated the idea of a Mt. Gox revival back in February, following talks with the exchange’s embattled CEO Mark Karpeles. The firm has already filed a comprehensive rehabilitation proposal with the Tokyo District Court, outlining its plans.The proposed plan would give Sunlot Holdings control of Mt. Gox and cost $8m to implement. Sunlot claims it already enjoys the support of more than 70% of Mt. Gox creditors.Creditors would receive some compensation, but since Sunlot Holdings puts the exchange’s outstanding debt balance at $421m, it is clear that they can’t expect much in the way of hard cash. They would, though, stand to gain a substantial stake in the new company – with liquidation they would not.bankruptcyMt. GoxSunlot
Original author: Nermin Hajdarbegovic