As predicted, the court in Tokyo has ruled that Mt. Gox will be liquidated. An “Announcement of Commencement of Bankruptcy Proceedings” was posted overnight April 24 by the Japanese bankruptcy trustee Nobuaki Kobayashi on the Mt. Gox site to confirm that the company is officially in bankruptcy (liquidation) in Japan. The Announcement also includes a “Frequently Asked Questions” section to give a very high level overview of the liquidation process.
The related Chapter 15 case status conference that had been scheduled for April 24 in Dallas has been postponed to April 30 and it is a virtual certainty that a new foreign representative will be named in place of Mark Karpeles (whose deposition the American bankruptcy court previously had ordered). The new foreign representative could be Kobayashi or his designee to serve in that role.
It is reasonable to assume that the class action plaintiffs will continue to press to have the Chapter 15 case in Dallas dismissed by arguing that there can be no reliance on the initial actions by Karpeles to commence the case. As an initial matter, Kobayashi or his foreign representative designee is likely to oppose that effort. Mt. Gox creditors (depositors or vendors) have an incentive to join in the trustee’s effort or risk having the Chapter 15 dismissed and any U.S. assets that might exist going to the class action plaintiffs. U.S. creditors could also argue that the Chapter 15 could also serve as a “brake” on the potential for large damage claims that might be asserted in those cases that would inevitably dilute recoveries to depositors and vendors.
The trustee is focused on liquidating the exchange, without intention to operate it, although liquidation could be accomplished through a sale of the exchange to a third party that would re-open it. The media has reported that at least one group of investors is interested in buying and restarting the Mt. Gox exchange.
The U.S. Bankruptcy Judge in Dallas has indicated a strong interest in having Kobayashi participate in the status conference by phone. It remains to be seen whether that will occur.