DISCLAIMER: This blog entry has been prepared for general information purposes only to permit you to learn about MtGox Bankruptcy. The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice. Communication on this website does not create or constitute an attorney-client relationship.

Given the legal advice we’ve been given, I believe CR is our only shot at getting a fair distribution. We’ve been advised that the Bankruptcy Act is too comprehensively written to challenge – there is no wiggle room. And also that trying to sue Mark afterwards is problematic. Even if we could prove cause, it’s not easy to assign a value to his blame (Can we prove that opportunity cost due to the delay to distribution of assets is his fault given he had no control on the timescale? – that’s by no means a given.) – No need to argue with me on this, it’s Japanese judge you’d have to argue with.

So we are proceeding with CR. Another creditor’s lawyer (Nishimura & Asahi) has filed an application for CR, (see www.mtgox-creditors.com) and our lawyer is working with him. I’ve been told who N&A’s clients are. They are BTC creditors who were happy to share their names, but their lawyer has asked that they be removed from this blog.

I’ve spoken with Dan Kelman who is one of them, and he’s been very open and cooperative and we are both keen to work together.

The court has appointed an Examiner, to look at the application. They have to be satisfied that CR can be carried out securely, and within the law. This is not at all trivial to show this.

Both N&A and Sekido have ideas on how proving this can be achieved. On some things they agree, on others they are taking different approaches. Either way both have the ear of the Examiner, and it doesn’t matter who is right, as long as a solution the Examiner is happy with emerges.

Kraken have agreed to help us by becoming the sponsor for a CR plan. They would handle the logistics of distribution. This subject to them being able to meet the demands of being a sponsor. I have also reached out to other exchanges.

There is, to my understanding, a liability issue which needs to be addressed by the Examiner too. If CR is granted by the court, the legal entity created for distributing funds will be immune from liabilities that predate it’s existence. So no one can sue it for things Mt Gox did or didn’t do. But that means anyone with a grievance that hasn’t been fully settled yet could sue the Trustee for allowing CR to start. (This is a rough description of a more nuanced reality, but it’s close enough.) As a result the Trustee will oppose CR in order to force a court to make the final decision, and remove his liability. How forcefully he does this is anyone’s guess.

Sekido says that the Coinlab case doesn’t have to be settled before CR can be started.

Legally CR requires that all claims will have to be reassessed. So people that didn’t file claims in time will have an opportunity to be accepted. The hope from the lawyers is that the claims assessed so far can be re-approved automatically, and a window can be left open for creditors that were left out for them to file again. In terms of claim share dilution for approved claimants, this will actually be relatively small as most of those who didn’t file claims have small claims. In terms of timescale this will add a delay.

In terms of timescale, there is no deadline yet, but the negotiations with the examiner might go on til February. Who knows. If the examiner rejects the filing, it will be unlikely the court will look at this again and the trustee will proceed with Bankruptcy distribution.