Possible Bankruptcy on the Horizon After Months In Court as QuadrigaCX Case Won’t Bode Well


QuadrigaCX has gone through quite a long process in figuring out how to refund their customers after the major demise they experienced.

Though there were many problems with withdrawals and overall operation for the exchange for the better part of 2018, the year ended in the death of founder Gerald Cotten, taking access to cold wallets with him. After working to sort out the troubles in January, widow Jennifer Robertson filed for creditor protection for the exchange as they tried to figure out their next steps.

Rumors at the time suggested that the efforts made were just a way to precede bankruptcy proceedings, and there appears to be a little truth, even if it is three months later. The court-appointed monitor for the exchange, Ernst and Young (EY), decided to propose a transition in the proceedings. This transition would take the company from a restructuring of the company to bankruptcy proceedings.

The report was published Tuesday, as EY said that the conversion to a new process under the Bankruptcy and Insolvency Act (BIA) “will benefit” the creditors in this case. EY explained that the switch from the Companies’ Creditors Arrangement Act (CCAA) to the BIA would make it easier to “streamline the administration” of the court process and would minimize how much “professional involvement.”

Furthermore, this leaves more investigation to take place in the way of data and asset recovery.

Right now, there is about $190 million in cryptocurrency that is missing or frozen, and the transition to working under the BIA would still allow EY to work on the recovery of these funds. EY was brought into this case in response to the requests for assistance from QuadrigaCX when the company was having difficulty finding $136 million in crypto and another $53 million from third-party payment processors.

Deciding in favor of bankruptcy would come with many benefits, as EY says. Quadriga would have the opportunity to sell off assets and would no longer have the need to maintain a chief restructuring officer or director. The representative counsel would still be involved, and the exchange’s trustee could increase their “investigatory powers” without a court order implemented.

Furthermore, bankruptcy is definitely more cost effective than the current proceedings, though the biggest savings would be that there’s no need to continue updating the courts on the fund recovery. Still, reports would continue to be provided to “Affected Users” at that time.

EY believes that the research that they have engaged in for the missing Quadriga funds has to be almost over, as they’ll be submitting a final report on all of their progress within the next few weeks.

However, the filing that EY submitted with the request for transition and the promise of a final report did not indicate any progress on the discovery of missing cryptocurrency. However, there are several third-party processors noted that hold some Quadriga funds, but it is likely that court orders would help with the return best.

Interestingly, Robertson is the operator of one payment processor associated with Quadriga, known as Robertson Nova Consulting. However, she has insisted that this company holds absolutely no funds from Quadriga. EY explained that Robertson’s counsel told them that Robertson will “work to obtain final statements from the financial institutions that held accounts for RNCI and would provide them to the Monitor once available.”

Within this report, there are also notes that EY is filling an Asset Preservation Order on behalf of the exchange. The order includes any assets held within the estate of the late founder, Robertson, the Seaglass Trust, Robertson Nova Consulting Inc., and Robertson Nova Property Management.

Considering the lack of division between Quadriga and Cotten’s personal financial endeavors, EY insists that the separation is necessary. If the filing is approved, none of the above-mentioned entities would be able to interacts with assets.

Before speaking with Robertson and Robertson’s counsel, EY had already been in the works for filing a mareva injunction, which would freeze Robertson’s assets anyway. By implementing the asset preservation order instead, EY can continue their investigation against the exchange while selling recoverable assets to contribute to the creditors in this case.

https://bitcoinexchangeguide.com/leading-crypto-market-assets-surge-bitcoin-btc-ethereum-eth-xrp-ripple-and-bch-coin-price-analysis/

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