Bitcoin Mining Manufacturer HashFast Enters Chapter 11 Bankruptcy

By entering Chapter 11 bankruptcy, HashFast will now work with its creditors and seek a restructuring of its debt.

Jun 10, 2014 at 3:56 p.m. UTC
Updated Sep 11, 2021 at 10:51 a.m. UTC

Bitcoin mining hardware manufacturer HashFast has formally entered Chapter 11 bankruptcy following a court ruling.

The US bankruptcy court granted the company’s request on 7th June after it filed for bankruptcy protection two days earlier.

The move closes a turbulent chapter in HashFast’s history, nearly a month after laying off half of its workforce and publicly denying that it was filing for bankruptcy.

According to a 10th June blog post, the company is now in the process of reorganizing under Chapter 11. Most notably, CEO Eduardo DeCastro has resigned from his position as part of a broader reduction in HashFast’s operating team. Chief technology officer Simon Barber is now serving as interim president of HashFast, the company announced.

Additionally, HashFast has hired Chicago-based law firm Katten Muchin Rosenman LLP to chart its path through bankruptcy.

In a statement, HashFast said that a Chapter 11 reorganization is good news for creditors as opposed to a Chapter 7 liquidation:

“Our focus is to reorganize the company in a way that provides added value to our creditors, versus a liquidation scenario that would be of less value.”

Rehabilitation ahead

By entering Chapter 11 bankruptcy, HashFast now has an opportunity to restructure its debt and operations while still functioning as a business.

Under Chapter 11, a bankruptcy trustee is appointed to oversee the reorganization. During this time, a company seeks to change the terms of its debt via counselling with creditors. In some cases, a successful restructuring allows for the repayment of loans, generally with a reduced interest rate or different principal amount.

In addition to hiring Hatten Muchin Rosenman, HashFast has tapped a new chief financial officer, Monica Hushen, to oversee “business operations and bankruptcy matters,” the company said in its statement.

HashFast added that more information is to come regarding its bankruptcy path, saying:

“We will be sharing more specific information regarding our reorganization efforts over the coming days.”

CoinDesk reached out to HashFast for comment but had not received a response at press time.

Narrowly avoided liquidation

Prior to being granted Chapter 11 bankruptcy protection, HashFast came close to being forced into Chapter 7, a type of bankruptcy that results in asset liquidation.

One of the company’s creditors, LiquidBits, sought to persuade a US bankruptcy court in May to appoint a Chapter 7 trustee for HashFast. At the time, the firm said that HashFast failed to honor a $6m order.

An emergency hearing was held to hear both sides’ arguments, but ultimately, US Bankruptcy Judge Dennis Montali sided with HashFast and allowed it to continue operating in a limited capacity.

Bankruptcy attorney via Shutterstock

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
Crypto’s Credibility Problem – and How to Solve It

CoinDesk - Unknown
2
CoinDesk - Unknown
First Mover Americas: Bitcoin Heads for Record 8-Week Losing Streak

The latest moves in crypto markets in context for May 20, 2022.

The latest moves in crypto markets in context for May 20, 2022.

CoinDesk - Unknown
3
CoinDesk - Unknown
The Fall of Terra: A Timeline of the Meteoric Rise and Crash of UST and LUNA

A detailed timeline of Terra's journey from its underdog start as a payments app in South Korea to a $60 billion crypto ecosystem to one of the biggest failures in crypto.

A detailed timeline of Terra's journey from its underdog start as a payments app in South Korea to a $60 billion crypto ecosystem to one of the biggest failures in crypto.

CoinDesk - Unknown
4
CoinDesk - Unknown
The Future of Blockchain Technology: Building It Decentralized, Secure and Efficient

The core challenges facing the crypto community as they strive toward mass adoption.

The core challenges facing the crypto community as they strive toward mass adoption.

CoinDesk - Unknown