According to a recent announcement, failed Bitcoin exchange, MtGox, has finally been given the O.K to proceed with bankruptcy. The Tokyo District Court released an order for MtGox to start its bankruptcy proceedings. Nobuaki Kobayashi, an attorney, has been assigned the role as the bankruptcy trustee. This means that the assets belonging to the company are in the power and control of the bankruptcy trustee, who will commence the bankruptcy proceedings. The trustee will investigate the claims against MtGox and look at the company’s assets for liquidation.
MtGox to Proceed with Bankruptcy
In the rest of the announcement, frequently asked questions have been answered regarding the bankruptcy proceedings. To explain the bankruptcy trustee in depth, it is written,
“Bankruptcy trustee is the person who will implement the bankruptcy proceedings from a fair and independent perspective, through, among other means, the administration and realization of the Company’s assets and the investigation of the claims and the liquidating distribution if funds for distribution are secured.”
Under bankruptcy proceedings, claims will be investigated, if there are funds available they will be liquidated, and the assets of the company will be converted into cash and managed. A creditors’ meeting will be held on July 23, 2014. More details on this will be available on the MtGox website. It is important to note that if creditors are not present during the meetings, they can still be a part of the liquidation distribution.
In order for a creditor to get part of the liquidation distribution, they must file proof of claim. It’s stated,
“The filing of proofs of the claims is a procedure where persons who have bankruptcy claims file proofs of such claims, such as creditor’s name, address, and amount of claim, for participating in the bankruptcy proceedings.”
Interestingly enough, it is not a guarantee that the claims will be approved. However, without any filing, the creditors will not be able to secure any liquidating distribution. More information regarding filing proofs of claims will be made available through the MtGox website at a later time. The announcement notes that this may take several months to happen since there is a large amount of creditors.
Bitcoin Price Reacts
As a result of MtGox’s bankruptcy proceeding news, Bitcoin’s price initially reacted negatively but has since recovered. The current price of the digital currency is over $490. Even though the failed Bitcoin exchange is proceeding with bankruptcy and liquidation, it is not directly related to the growth of Bitcoin.
CoinReport will follow this developing story and provide further updates.
Chart Image via Bitcoinwisdom.com