Creditors of the defunct bitcoin exchange Mt. Gox just won a big victory.
According to a Friday release from Mt. Gox trustee Nobuaki Kobayashi, the exchange’s ongoing bankruptcy proceedings have been paused and a civil rehabilitation process will commence. The Tokyo District Court issued an order on June 22 approving a petition to begin civil rehabilitation, which was initially submitted in November of last year.
Those seeking to recoup funds from the exchange – once the world’s largest by trade volume before it dramatically collapsed in 2014, resulting in hundreds of millions of dollars in losses – could see their money sometime in the next year as the civil rehabilitation process moves forward.
Notably, Kobayashi’s document implies that creditors seeking to regain their lost funds in bitcoin may receive larger amounts of cash than those who originally sought to be repaid in fiat currency when the exchange began bankruptcy proceedings.
“In bankruptcy proceedings, non-monetary claims are converted into monetary claims based on the valuation as at the time of the commencement of bankruptcy proceedings. In contrast, in civil rehabilitation proceedings, non-monetary claims are not converted into monetary claims at the time of commencement of the civil rehabilitation proceedings. Therefore, in the civil rehabilitation proceedings in this matter, claims seeking a refund of bitcoins (‘Bitcoin Claims’) will also not be converted into monetary claims after the commencement of the civil rehabilitation proceedings.”
The document continued, saying that “the amount of voting rights of bitcoin creditors for resolutions on the proposed rehabilitation plan is based on the valuation of bitcoins as at the time of commencement of the civil rehabilitation proceedings.”
In other words, Mt. Gox’s bitcoin holdings will not need to be sold, as has been happening, but can instead be distributed on a pro-rata basis. This means that future creditors may receive more than $440 per bitcoin (a value that comes from the price of bitcoin at the time bankruptcy proceedings began), a possibility that has previously been a source of controversy.
Kobayashi will report on the status of Mt. Gox’s assets at a creditors’ meeting on September 26 in Tokyo, he wrote. Claimants will then have until October 22, 2018 to file for rehabilitation, including submitting proof of their claim.
A proposal for fulfilling the rehabilitation requests will then be submitted to the court by February 14, 2019, according to Kobayashi.
Bitcoin image via Shutterstock