Topic: How to put Mt. Gox into involuntary bankruptcy in Japan. (Read 6755 times)

You could get an injunction to specifically prevent them moving any BTC from certain addresses (technically they aren't supposed to move anything at the moment anyway).  You could ultimately seek an order to have BTC from those addresses transferred to an address controlled by the supervisor/investigator. 

It all depends on how willing MtGox is to risk being in contempt of court and how long it might take to get such orders - and whether you can prove that the addresses belong to MtGox (they shouldn't be "frozen"  or seized by any means unless substantial evidence of them belonging to MtGox, Tibanne or Mark can be demonstrated).

I m thinking that if there is any technical way to freeze these stolen btc i would be in favour of it

but i don t know if this is doable or not?

Yes, though when I suggested the verifiable Mt. Gox addresses on the blockchain be frozen for this purpose, it raised howls of indignation.

I'm a bit more cynical than you and believe that criminal investigations are likely to reveal activity which will result in seizure of assets by various law enforcement authorities, making those assets unavailable for satisfaction of creditor claims.  There's non-trivial chance that a proportion of the assets of Mark, Tibanne and MtGox can be demonstrated to in some way have been obtained from people using MtGox for criminal activity and if those assets are seized then the onus will be on Mark and creditors to prove seized funds were legitimately obtained.

The criminal investigation aspect of this is a double-edged sword which can complicate the insolvency even further (both could drag on for a long time).

Yes, it will. First, if fraud is proven, Karpeles' personal assets go into the recoverable funds. Second, much more can be done to find the missing funds in a criminal case than in the current debtor-in-possession situation. Third, other Mt. Gox employees can be questioned.

"Simpler" won't necessarily increase the likelihood of MtGox users ever recovering any funds.

Useful article at the Wall Street Journal: Mt. Gox’s Bankruptcy Case Will Be Unlike Any Other . Top bankruptcy lawyers from major law firms see this as hard.

However, it will all get a lot simpler if there are some arrests.

This is addressed somewhat in the Chicago lawsuit where it's being argued that Mark is indistinguishable from Tibanne, MtGox and MtGox Inc.  Unfortunately, their information is unreliable.  They claim that Mark is the sole shareholder in all three entities but according to MtGox's own business plan Tibanne owns 88% of MtGox and Jed McCaleb owns 12% of MtGox.

The financials are kind of interesting in that MtGox paid consulting fees to Tibanne.  It's not an unusual way to set things up, but I'd probably look to Tibanne's financials rather than those of MtGox to find out how much Mark has been paid.

Well, it's your lawsuit and your call. Still, making sure records and assets are preserved despite anything Karpeles does is top priority.

re lawyers working on case:


http://www.coindesk.com/mt-gox-lawsuit-target-mark-karpeles-personal-wealth/

Yes, though apparently we mostly wait for the next post and filing, unless we want to spend money to try and force Mark Karpeles out now, which there hasn't much enthusiasm for doing.

A very interesting detail in all this. Sounds like we should expect some news within a month then. I agree, this is likely just a step on the way to liquidation. Unless MK pulls something out of the hat, like finding the missing BTC, or if they are under some legal control elsewhere.

Now that's an important point. Take a look at this: "Corporate - Transparency of Japanese Law". Supreme Court of Japan: "Where the legal personality of [a company] is nothing more than a mere shell, or where it is misused in order to avoid the application of legislation…it will be necessary to pierce the corporate veil." That's similar to US law. "Piercing the corporate veil" in single-owner company situations where fraud is involved is not uncommon.

The next question is what kind of corporation Mt. Gox is. Tibanne KK, which may be the parent of Mt. Gox, is a kabushiki kaisha, a stock company. They're supposed to have a board of directors, stockholders meetings,  a company auditor, a board of company auditors, an accounting advisor and an accounting auditor. As far as we know, none of those things existed. It's not clear what "Mt. Gox Ltd" is, or who owns them.

"Piercing the corporate veil" here may involve the relationships between Mt. Gox and Tibanne as well as between Mark Karpeles and the various corporate entities.Where assets and liabilities of the different companies were not clearly distinguished, piercing the corporate veil is likely.  This is the sort of thing that corporate lawyers routinely untangle.

Here's a commentary from a law firm on piercing the corporate veil in US law:

In determining whether corporation is merely the alter ego of an individual, a court will look at a number of factors.  It is important to remember that no single factor will generally be determinative and the cases that explain this doctrine tend to look at the totality of the circumstances.  These factors include:
1. inadequate capitalization,
2. failure to issue stock
3. failure to observe corporate formalities
4. nonpayment of dividends
5. insolvency of the debtor corporation
7. absence of corporate records
8. commingling of funds
9. diversion of assets from the corporation by or to a stockholder or other person or entity to the determinant of creditors
10. failure to maintain arm’s length relationships among related entities
11. whether, in fact, the corporation is a mere façade for the operation of the dominant stockholders.

Mt. Gox probably qualifies on most of those counts.

Does anyone have a lawyer representing creditors involved in the bankruptcy proceeding yet?

This is actually a very good point.  Considering how much diligence they put into their codebase, which was Karpeles personally, basically, I can't imagine what their compliance with corporate integrity would have been.  It could be that they also screwed up their corporate filings and other formalities so much that the corporation is basically an alter-ego of the principals, i.e. something more like a partnership than a corporation, where the individual partners can be held liable.

I wouldn't even speculate as to exactly how Japan deals with the concept of "piercing the corporate veil," but I'd consider it highly possible.  Not because of any specific evidence I have, but just because of what a bunch of fuckups these people are.

So which of them involve a purported Japanese corporation trading in a cryptocurrency where the bulk of business was outside of Japan, the CEO is a French national, and there are competing and mutually exclusive claims in Poland, the United States, and Japan?

Additionally, there may be more assets available than Gox is claiming.  I remain skeptical that they actually lost something like 750,000 BTC over the course of months or even years and didn't even notice it disappearing.  Sure, it's hard to imagine why they'd claim that if it weren't true (unless they stole it themselves), but nothing about this makes much sense.

So a Japanese court in bankruptcy (if it doesn't find some forum non conveniens-type reason to say fuck this and let someone somewhere else handle it) will have to resolve what Bitcoin legally is, whether there's a fiduciary duty here (seems there is), what precedence different kinds of debt will have in this situation (particularly cryptocurrency), figure out where the money is if anywhere, etc.  No court has ever addressed these specific issues in Japan, and they are basically unresolved elsewhere.

The fact that scams have existed in the past (duh) isn't really relevant to the legal issues this particular court will have to figure out in this particular case.  The Japanese legal system is also so absurdly slow that it is a virtual certainty some creditors will attempt to bypass it and have another court in another country assert jurisdiction over the same issues, prompting a jurisdictional fight.  I'm not sure why people are certain that Japanese courts are going to be incredibly eager to take up this case, and I think it is just as likely that given any legal doctrine or excuse, they'd rather it were someone else's problem.  Unless, of course, they actually are insulted enough by Magikarpeles that they want to go after him criminally and then they'd probably want to deal with the whole ball of wax.

The US Attorney (Manhattan) and the FBI have both gotten involved in this according to Bloomberg, so I think there'll be US technical competence involved in this whether or not it's directly through the bankruptcy proceedings.  I doubt that the supervisor/trustee is going to deny US law enforcement access to MtGox records given that Japan has multiple co-operation agreements with the US in respect of financial and other crimes.

There's also the local jurisdiction issue of exactly which law enforcement agency would be responsible for investigating various aspects of this case (here it usually ends up being one agency pulling in assistance from other agencies which have various expert resources).

The "truth" about MtGox might not come from investigations carried out by the supervisor/trustee/local police, but rather from international investigations into crimes largely unrelated to the collapse of MtGox.

The reason I believe restructuring won't work is because the numbers don't work.  MtGox's own financial projections simply don't project sufficient profit for restructuring to be a viable alternative.  It would only "work" if all BTC debt was eliminated (the loss is too great to be recovered from future profits) and fiat liabilities were written down by the supervisor/trustee (apparently they can do this in respect of unsecured creditors). Unfortunately, even doing that wouldn't guarantee MtGox being viable because of other legal issues which it's been unable to solve - it's the same reason why converting debt to equity and effectively making creditors shareholders isn't a workable option.

Right. Also, the court can put in a trustee (replacing the CEO) instead of a supervisor. This is likely where there is evidence of fraud. With all the lawsuits underway, I expect that evidence of fraud will be presented to the court in Tokyo.

What's really needed is to bring in a trustee, computer forensics experts, forensic auditors, and criminal investigators to find out where the assets went and where they are now. The court and the Tokyo police have the authority to do that.

Whether they have the technical competence is a question. The Tokyo police have a cybercrime unit, but it's less than a year old.  The National Police Agency in Japan has a temporary cyber-crime study group, which was supposed to report on starting up a national cyber-crime center by the end of 2013. One would think that Japan would be further along in this area, but apparently not.

It's a little bit of a tangent but related.

According to this, the court generally makes a determination about whether restructuring will go ahead within one month of filing.


III. Civil Reconstruction under the Civil Reconstruction Code


http://www.jurists.co.jp/en/topics/others_4007.html

I can't see a hope in hell of MtGox coming up with a viable plan within a month or coming up with a plan which will get the approval of 50% of unsecured creditors, so I wouldn't be surprised if this proceeds to liquidation relatively quickly.

The attorney we had retained on this matter indicated that the fees are paid out of the assets of the insolvent company, so I believe similar to other countries in that regard.

Make sure you read the book on this one.  The documentary leaves out an awful lot of really important stuff.  I think it's the most relevant to Bitcoin on so many different levels out of the books suggested.


You already have default legal recourse in Japan through the insolvency proceedings.  Nobody can really advise you whether it's "worth" taking legal action outside of those proceedings.  Someone in Japan is probably going to get a lot better advice about that from local litigation lawyers than someone in the US or the UK, though (my understanding is that Japan doesn't have class actions as such - it has multi-plaintiff actions and those have their own set of rules).

Thanks for elucidating many of the details of this case. I have 2.5 million Yen tied up in Gox so I'm currently considering joining a class-action suit. What I've been wondering is if I have a better chance (as a permanent resident of Japan) joining a foreign suit or seeking legal recourse here in Japan. Will be following this thread closely.

Nah. Things like this have happened before. There's not much new in the fraud business. Learn some financial history.

Suggested reading:

* "Extraordinary popular delusions and the madness of crowds" - a century old book, and all the major scams are described.
* "The Great Salad Oil Swindle" - 50 years ago, a scam involving trading in receipts for nonexistent salad oil. Sound familiar?
* "The Smartest Guys in the Room" - how Enron blew it.
* "Faking It in America" - how a 19 year old created a $100 million phony company.

Yes, those are all books. Big books with lots of words. You'll see precedents for just about every scam seen in the Bitcoin world.

The Bitcoin world is a lot less original than it thinks it is.

The Japanese court will have the power to locate and pursue assets (even offshore assets - note that MtGox included those in their Crisis Strategy so they've almost certainly included them in the filings).  It's not uncommon for there to be multiple companies involved in insolvency cases nor for assets to be located offshore.  It's not uncommon for funds to have been converted into something else, either (there are plenty of untraceable things which can be bought, regardless of what you use to purchase them).

The wild cards are personal liability - ie, can Mark and Jed be found personally liable for the losses and their assets attached (this can happen under certain circumstances in other jurisdictions) by the supervisor/trustee - government seizure, and whether BTC liabilities will be rolled into the civil rehabilitation (it can't possibly work if they are, so civil rehabilitation would just become the scenic route to liquidation).  We have no idea what proportion of remaining MtGox assets might be vulnerable to seizure by authorities (Japanese or foreign) in relation to criminal offences.  The US, at least, pursues asset substitution if it can't locate specified assets - meaning that it will seize something else of similar value (even if that thing is legally obtained) to assets it can't locate.

This is new ground and old ground at the same time.

Actually, I think you're misunderstanding the point I was making.  We don't even really know what entities or human beings have possession of the actual assets of Gox, or where they're located physically, if they even are.  The Japanese bankruptcy might be the only action that matters, but it could be nothing more than squabbling over the contents of an empty shell, and the real assets are elsewhere long ago.

Pretty much anything anyone can say at this point is speculative, because this is terra incognita.  Nothing quite like this has ever happened before.

I think you're misunderstanding the point he's trying to make.  You can sue in another jurisdiction for negligence, conversion, breach of contract, etc and win, but your judgement doesn't give you a superior claim in the insolvency proceedings (and under UN model law many nations actually take into account insolvency proceedings in another jurisdiction when determining litigation in their own backyard).  

MtGox is actually prohibited by law from paying any of their creditors at this point.  The insolvency is taking place under Japanese law, which effectively means that MtGox assets are now under the control of the Japanese legal system (via those appointed by the court).  No-one's getting more than other creditors unless they can establish themselves as a preferential/secured creditor (under the criteria required by Japanese law) or unless they pursue assets which aren't under the control of the Japanese legal system.

Also, the point of litigation is rarely to go to trial.  In the vast majority of cases the plaintiffs are hoping to force a settlement offer - something insolvent companies aren't in a position to make without the approval of the courts in the jurisdiction where their insolvency proceedings are taking place.

What people seeking to sue in other jurisdictions are hoping to do is inflate their claim by punitive/exemplary damages in the hope of recovering a larger portion of their losses than other creditors.  It's a trick as old as the book.


This is kind of interesting because elsewhere the fees of those appointed by the court are paid out of the insolvency estate (the hourly rate they can charge is set - it's hundreds of dollars per hour here plus additional fees for administrative staff, accountants, etc).  Are you saying that even if this takes thousands of hours of work to sort out (which it may well do) and the cost runs into millions, the government will pay for that and not a cent of those fees will come out of the remaining assets of MtGox?

Yes, but the Constitution also looks really nice on paper.  It's a question of whether or not you actually get the rights it says you have that matters.

I'll note the bold language you quoted does appear to establish a fiduciary duty by Mt. Gox, which holds them to at least the standard of a bailee (holder of another's property entrusted to them).  Whether or not banking laws apply, this law might apply.

Also, even in the absence of a specific choice-of-law agreement, most countries have statutes or legal precedents defining what country's laws they use when the nucleus of operative facts occur in multiple countries.

They said this. (from archive.org):

Mt. Gox represents and warrants that:

* it will use all reasonable care and skill in facilitating the matching of offers of the Members on the Site via the Platform to conclude Transactions.
* all purchase and sale offers, as well as Bitcoin Purchase Transactions, made on the Platform, will be managed in an anonymous manner so that Buyers and Sellers will not know each other.
* the Transaction Price is calculated on the basis of actual matched offers made by Buyers and Sellers participating in the bidding process on the Platform combined with the applicable Commission.
* once offers to buy or sell Bitcoins are matched, such offers may not be withdrawn.
* Transfer of Bitcoins in a Transfer Transaction may not be withdrawn.
* it will hold all monetary sums and all Bitcoins deposited by each Member in its Account, in that Member's name as registered in their Account details, and on such Member's behalf.
* it shall comply with any and all laws and regulations relating to offering the Platform.

...
To the extent permitted by law, Mt. Gox will not be held liable for any damages, loss of profit, loss of revenue, loss of business, loss of opportunity, loss of data, indirect or consequential loss unless the loss suffered is caused by a breach of these Terms by Mt. Gox.

Mt Gox cannot be held liable for any malfunction, breakdown, delay or interruption to the internet connection, or if for any reason our site is unavailable at any time or for any period. Where our site contains links to other sites and resources provided by third parties, these links are provided for your information only. We have no control over the contents of those sites or resources, and accept no responsibility for them or for any loss or damage that may arise from your use of them.

In the case of fraud, Mt. Gox will report all necessary information, including names, addresses and all other requested information, to the relevant authorities dealing with fraud and breaches of the law. Members recognize that their account may be frozen at any time at the request of any competent authority investigating a fraud or any other illegal activity.

To the extent that a Member operates and uses the Site and the Platform other than in the course of its business ("Consumer"), nothing in these Terms shall affect the statutory rights of such Members.

Nothing in these terms excludes or limits the liability of either party for fraud, death or personal injury caused by its negligence, breach of terms implied by operation of law, or any other liability which may not by law be limited or excluded.

Subject to the foregoing, Mt. Gox's aggregate liability in respect of claims based on events arising out of or in connection with a Member's use of the Site and/or Platform, whether in contract or tort (including negligence) or otherwise, shall in no circumstances exceed the greater of either (a) the total amount held on Account for the Member making a claim less any amount of Commission that may be due and payable in respect of such Account; or (b) 125% of the amount of the Transaction(s) that are the subject of the claim less any amount of Commission that may be due and payable in respect of such Transaction(s).

There's no choice-of-law or arbitration provision.

Those are not unreasonable terms. They're better than Kraken's, for example.

Depends.  What did their terms and conditions/TOS/etc say?  Many contracts with corporations have explicit choice-of-law and forum terms, i.e. something like "In the event of any dispute concerning this Contract or the services sold hereunder, suit may be brought only in a court of competent jurisdiction in the State of California."

And/or

"Any dispute arising from this contractual relationship shall be governed by Delaware law."

Generally, the choice of law and forum clauses specify the venue and the applicable law, which is usually the same state and/or country/province/whatever.

Even when a country chooses to exercise jurisdiction over a dispute in derogation of a choice of forum clause, courts are usually deferential to choice of law provisions, as the nature of a choice of law clause essentially incorporates the relevant law into the contract as part of what the parties agreed when signing it.

It looks like the Gox fiasco is about to be litigated in multiple jurisdictions, so I guess we'll see how this all plays out in reality, but it'd be nice to know what Goxers actually contracted for when they clicked past some TOS to sign up without reading it.

If some lawyer would answer this question or would imply there are some hopeful solutions, that must be lie or he doesn't really know the problem of this case.

In this case, at least now, only we can do is to wait for the letter from the law firm of mtgox's, sadly. This letter is for creditor's report which we will send back to the court. They announced that if you will not receive that, call the call center by yourselves.
Usually, then they will invite us a creditor's meeting to explain the situation, their plan, etc., but in this case, they said they have no idea at all when they will be able to have the meeting.

Anyway, there is no way to be redeemed sooner than others nor more than others because we creditors are all equal under this procedure by law even if we sue them outside Japanese jurisdiction.

We can only wait and see for a while....My hundreds of btc is also stuck in there.

so what do you suggest as we have a bunch of btc stuck in there?

The supervisors are private lawyers but appointed by the court in regard to the case.
So they are paid by the court and they are completely neutral.

Not secured.
Mt.Gox nor their service isn't covered by any Japanese payment/finance related acts.
I'm a lawyer in Japan.

Any answer you get on here is going to be pure speculation by people who have no direct involvement or experience with the Japanese legal systems.

Nobody knows how this is going to play out.  No matter how much you want someone to tell you that you might recover some funds, anyone who tells you that is just telling you want you want to hear.  There's simply not enough information available for people to make educated guesses right now and there are many factors which could change the possibilities.


I'm inferring from the MtGox announcement that there is a supervisor.  The announcement specifically states that customers should direct their questions to the call centre rather than the supervisor/investigator.  

The quickest way to get information about the supervisor is probably to contact one of the journalists who has been covering this.  It will be a matter of public record and organisations like the WSJ will probably get their hands on the filings quickly.  I'd just keep tweeting the various outlets which have been covering this.  One of them is likely to publish the filings sooner rather than later and it's probably going to be a quicker way of getting the information than retaining a Japanese lawyer to get it for you.

Also Nagle, do you have any information on payment for supervisors/trustees under the Japanese system?  I didn't really look into that in any depth so I'm unclear about whether the company is billed for their services (and the services of those assisting them) at an hourly rate as is the case here.

Keep digging for info on that. That's the kind of info that can be used to convince the judge in Japan to kick Karpeles out and put a trustee in.

just read this

he has been arrested in france for some fraud over payment on internet before coming to japan.

and he seems he has gone to japan as he had to avoid to be caught again (during 5 years).this should have been resulted in 3 months of prison.

http://gawker.com/does-mt-goxs-ceo-have-a-secret-history-of-online-payme-1534752110

Absolutely not. Mark Karpeles is either criminally negligent or involved in criminal activity. In either case, he should not be the representative director for this action. We will be determining what legal motions can force him from this position and force both him and other officers out of any access to Mt. Gox files. The professionals need to take over now.

So you suggest to wait and see how Mark will handle the situation?

Civil rehabilitation in Japan doesn't stop everyone from suing. "Secured creditors" can still sue. It's more limited than US Chapter 11 in that respect. Whether Mt Gox depositors are secured creditors is a very important legal question. Given Mt. Gox's terms of service and the Japan Payment Services Act, they probably are. That's a key issue. Does anyone have a lawyer working on that?

Also, there should now be a court-appointed supervisor overseeing Mt. Gox's activities. Who are they? How do you contact them?

The purpose for filing bankruptcy protection is to STOP you from suing, and winning. So you don't put US at losses, taking our chunk of the losses, which have not even been distributed yet.

This is similar to a "chapter 11" filing, in japan... It does not make it so Gox owes nothing... it simply give Gox the chance to "make up the losses". This is not the type of bankruptcy you sue for, to get things back.

You do realize your coins will not be valued at todays prices, but at the price at which you deposited them, or obtained them. You will not be getting back an equal amount of BTC if you sue, only asset value. However, if you just wait... And let the investigation continue, allowing Gox to get back up and running, or sell... then you will be compensated for your BTC-BTC funds. Not to mention all the fees of the lawyer. (Or the taxes before you can actually get your asset-value, if you had not claimed them as long-term holdings, in an over-seas exchange.)

Good luck with that.

No, you do not need to "wait for the call center to open". If you had significant funds in Mt. Gox, you need legal representation in Japan now, to be involved in the bankruptcy.

So after this what do you propose ? I had some fiat withdrawal > 6.000€ initialized in January that did not arrived and BTC in my account.
What i best for me to do  now?

You think i will get back my withdrawal 100% ? And what about the BTC.

Filing for "Bankruptcy Protection" and filing for "Bankruptcy" are not the same...

Gox filed for "Bankruptcy Protection", so that his assets will not be lost. This will allow him to operate, with frozen assets, once an actual investigation has occurred, to prove "theft claims". You can't just say "I am bankrupt", you have to actually prove it. I can tell you right now, that the numbers proposed are inaccurate, and not the way "asset value" is actually reported.

Those who deposited 10,000 BTC when the price was $10/BTC, have an asset-value of only $100,000 USD, not the value of $600/BTC at the current price it was lost. (Because they did not "realize" {cash-out} for that value.) That is one thing that is "off" in the estimates. They may also have to UNDO the last few trades, because the BTC was not there to trade, for the money that it was offered for. That will break a few hearts, and heal some others. If the BTC wasn't there, and you gave $12,000 buying it, YOU do not own those BTC, and that person does not own that currency. They lost the BTC, and you get back your currency.

In any event, this is still going to be a messy resolution. One which will not happen over-night, but one which will have a semi-agreeable resolution, because he didn't just run away. He stayed to protect us, and his investors.

There is also the issue of "what funds were stolen", "when they were stolen", and "when they stopped being stolen". In addition to the fact that some of those "may be recoverable/accountable", because they know WHO they went to, by accounts and by IP's, on some respect. However, this filing HAD to be done, to "freeze the assets", to make for a proper legal investigation, and to protect US and the INVESTORS. While still allowing him to operate, if it can be proven that the "issue has been resolved". Also if it can be proven that the income from trades, could potentially "cover losses", once the "losses are factually realized", which can only happen after an official investigation.

For all anyone knows, the coins could just be in another wallet, still in his possession. Which is what a full legal investigation and he, will have to prove otherwise.

That also allows him to "sell the assets", which would cover most losses, as part of the sale, thus, reducing the price he could sell the exchange for. (If it were to be consolidated, that would be to simply accept all loss, which would STILL have to be covered.)

We have to wait for the "call center" to open, to confirm our losses. Thieves will obviously not be calling. Thus, those will not be counted as part of the loss. That is good for us, because it gives us a better chance at getting back all of our funds.

Not to mention, there were funds available, after the theft had stopped. Those funds, after that date, will be 100% returned. Which an investigation still needs to show. We were not investors. We were customers. Investors are the ones who are at the greatest risk of loss here. Customers, will all have to be paid back, in some way. Even if this was truly just a "Bankruptcy", it does not absolve him from paying back losses. It simply acknowledges the loss, for further legal proceedings to occur.

I think a motion to remove Karpeles, given the history of misleading statements and losing 740k BTC, is likely to be successful.

While we no longer need to force them into bankruptcy, we will continue to employ an attorney in Japan to represent the interests of the depositors.

Evidently any creditor can demand certain information from the trustee as well as make other motions.

In particular I am anxious to have the attorney working on protecting the interests of bitcoin holders.

pmed

More info from Forbes.: "Mt. Gox sought protection from creditors under Japan’s Civil Rehabilitation Law.  Under the law,  which is similar to Chapter 11 under U.S. Bankruptcy law, the company will be able to continue as an ongoing entity while an independently-appointed official supervises the restructuring of operations."

That's not good. It means Karpeles is still in charge. Of the six types of bankruptcy in Japan, civil rehabilitation is the only one that leaves existing management in place. There's now a court-appointed supervisor, though. Anyone know who it is?

Now you really need a lawyer in Japan. Japan has six types of bankruptcy. Mt. Gox is probably trying for civil reconstruction, which is a debtor-in-possession scheme much like Chapter 11.  However, in all bankruptcies in Japan, there is a court-appointed supervisor, which will be a lawyer chosen by the court.  This is short of full trusteeship, and existing management remains partially in control.

The court can decide to put in a supervisor or a trustee. Some of Mt. Gox's creditors need to be in touch with the court. Like now.

hi

so as he has filled against bankruptcy ,what is the choice remaining to us?

Hi,

Keep me posted as well.

Thanks.

It is underway. I will be posting more broadly to recruit more plaintiffs tomorrow, but feel free to PM me in the meantime.

If someone is actually doing this, don't dawdle. Get it done within days.

(I don't have any money in Mt. Gox. But I've collected debts in high 6 figures across borders before.)

hi

i ve sent pm also

keep me posted

thanks

PMed.

@CompNsci sent PM. As you say its going to take sometime to get this moving so best start now. Of course if Gox sorts its life out in the mean time nothing lost but time while we are in the early stages at least. 

start as soon as possible. whatever the outcome - it will take years (reimbursement), so patience is advised.
fact is, do something you have a chance of reimbursement. do nothing and you will never be reimbursed.

Starting to prepare to do this -- at early stages. Please PM me if you have a substantial debt owed to you by Mt. Gox (let's say $20,000 USD or 40 BTC or more) and wish to join in an involuntary bankruptcy proceeding.

I know there is much discussion here and elsewhere about the wisdom of this, etc. My view is that it will take some time and is likely best to start now.

That Bingham paper is oriented more towards large corporate bankruptcies where the ongoing business is worth much more than the liquidation value, and where the business capital came from lending banks. That's not the case here. Mt Gox is more like a routine failed small/medium business liquidation.

Overview of the Japanese insolvency process, to help manage creditor expectations (it varies in some respects from the typical Western process, especially in terms of transparency and creditor input).

http://www.bingham.com/Publications/Files/2012/02/A-Practical-Guide-to-Japanese-Insolvency-Procedures

(I previously posted this in Service Discussion. Today, someone suggested I repost it in Legal. It seems timely.)

Here is a guide to bankruptcy in Japan, from Japan's largest law firm, Nishimura & Asahi:

IV. Liquidation under Bankruptcy Code

A. Commencement of Proceedings

An application can be made if (i) the debtor is unable to pay its debts generally or (ii) the liability of the debtor exceeds the value of the assets of debtor. Suspension of payment by the debtor shall be considered that the debtor is unable to pay its debts generally. An application for bankruptcy proceedings can be made not only by the debtor but also by creditors against the debtor.
...
D. Administration of Bankruptcy

1. Appointment of Administrator

The administrator is generally a practicing attorney. The administrator takes immediate possession of the debtor's assets (with the exception of assets which are exempt from the estate), administering and managing the bankruptcy estate until the final distribution of assets. Upon receiving permission from the court or the supervisory committee as described below, the administrator may convert all such assets into cash and deposit such in an appropriate bank.

Bankruptcies start fast - a week or two from filing to bankruptcy.

This will require a lawyer in Japan. It's what normally happens to companies in Japan who don't pay their bills.

Depositors with Mt. Gox may be able to argue that they have preferred status as secured creditors, because the Mt. Gox terms of service claim that depositor funds are kept in bank accounts separate from the company's own funds. So they should be paid before landlords, employees, etc.