memorandum of law in support of petition for recognition

8/12/2019 MEMORANDUM OF LAW IN SUPPORT OF PETITION FOR RECOGNITION

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770349-v1\DALDMS

David W. ParhamState Bar No. 15459500John E. MitchellState Bar No. 007970952300 Trammell Crow Center

2001 Ross AvenueDallas, Texas 75201Telephone: (214) 978-3000

Facsimile: (214) 978-3099Email: [email protected]: [email protected]

- and -

Erin E. Broderick (pro hac vice pending)Illinois Bar No. 6295974

300 East Randolph Drive, Suite 5000Chicago, Illinois 60602Telephone: (312) 861-8000Facsimile: (312) 861-2899Email: [email protected]

Attorneys for the Petitioner Robert Marie Mark Karpeles,

Foreign Representative of MtGox Co., Ltd., a/k/a MtGox KK

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

)

In re ) Chapter 15

)MtGox Co., Ltd. (a/k/a MtGox KK) ) Case No. 14-31229-15

)

Debtor in a Foreign Proceeding. )

)

MEMORANDUM OF LAW IN SUPPORT OF PETITION FOR RECOGNITION AND

APPLICATION FOR PROVISIONAL RELIEF, SCHEDULING HEARING, AND

APPROVING FORM AND MANNER OF NOTICE

Case 14-31229-sgj15 Doc 6 Filed 03/10/14 Entered 03/10/14 00:33:22 Page 1 of 29


2/29

TABLE OF CONTENTS

Page

-i-770349-v1\DALDMS

PRELIMINARY STATEMENT ................................................................................................... 1

I. BACKGROUND ............................................................................................................... 1

A. MtGoxs Business .................................................................................................. 1

B. MtGoxs Capital Structure ..................................................................................... 3

C. Business Challenges............................................................................................... 3

D. MtGoxs Japan Proceeding and Corporate Reorganization under the JCRA ........ 4

E. MtGoxs US Litigation Matters ............................................................................. 6

1. The CoinLab Action .................................................................................. 6

F. The Greene v. MtGox Class Action ....................................................................... 9

ARGUMENT ............................................................................................................................... 13

II. RECOGNITION OF MTGOXS FOREIGN REPRESENTATIVE AND

FOREIGN MAIN PROCEEDING ARE APPROPRIATE ............................................. 13

A. Mr. Karpeles May Be Recognized as MtGoxs Foreign Representative ............. 13

B. The Japan Proceeding is a Foreign Proceeding ................................................... 13

C. The Japan Proceeding is a Foreign Main Proceeding .......................................... 16

D. The Petitioner is Entitled to Relief Pursuant to Section 1517 ............................. 17

III. THE ISSUANCE OF PROVISIONAL RELIEF INCLUDING IMPOSITION OFAUTOMATIC STAY TO PROTECT MTGOX IS APPROPRIATE ............................. 18

A. MtGox Satisfies All Requirements for Injunctive Relief .................................... 20

1. Likelihood of Success on the Merits ........................................................ 20

2. Irreparable Harm ...................................................................................... 21

3. Balance of Hardships ............................................................................... 22

4. Public Interest .......................................................................................... 23

IV. THE PROPOSED NOTICE AND HEARING ON RECOGNITION ............................. 24

CONCLUSION ............................................................................................................................ 25



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-ii-770349-v1\DALDMS

TABLE OF AUTHORITIES

Page(s)

FEDERAL CASES

In re ABC Learning Centres Ltd., 445 B.R. 318, 328 (Bankr. D. Del. 2010) ...............................15

In re Bear Stearns High-Grade Structured Credit Strategies Master Fund,

374 B.R. 122 (Bankr. S.D.N.Y. 2007), affd 389 B.R. 325 (S.D.N.Y. 2008) ...................16, 17

In re Bear Stearns High-Grade Structured Credit Strategies Master Fund,

389 B.R. 325 (S.D.N.Y. 2008) ...........................................................................................16, 17

In re Betcorp Ltd.,

400 B.R. 266 (Bankr. D. Nev. 2009) ...........................................................................14, 15, 17

In re Ho Seok Lee,

348 B.R. 799 (Bankr. W.D. Wash. 2006) ................................................................................19

In re Integrated Health Servs., Inc.,

258 B.R. 96 (Bankr. D. Del. 2000) ..........................................................................................23

In re Japan Airlines Corp.,

No. 10-10198 (JMP), 2010 WL 1050075 (Bankr. S.D.N.Y. Jan. 28, 2010) ...........................21

In re MMG LLC,256 B.R. 544 (Bankr. S.D.N.Y. 2000) .....................................................................................20

In re Netia Holdings, S.A.,

277 B.R. 571 (Bankr. S.D.N.Y. 2002) .....................................................................................14

In re R&G Fin. Corp., 441 B.R. at 411 (Bankr. D.P.R. 2010) .......................................................21

In re SPhinX Ltd.,

351 B.R. 103 (Bankr. S.D.N.Y. 2006) affd, 371 B.R. 10 (S.D.N.Y. 2007) ...........................19

In re Tradex Swiss AG,

384 B.R. 34 (Bankr. D. Mass. 2008) .................................................................................16, 17

In re Tri-Continental Exch. Ltd.,

349 B.R. 627 (Bankr. E.D. Cal. 2006) .....................................................................................16

In re Vitro,

455 B.R. 571 (Bankr. N.D. Tex. 2011) ..............................................................................19, 20

In re W.R. Grace & Co.,386 B.R. 17 (Bankr. D. Del. 2008) ..........................................................................................23



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Lavie v. Ran (In re Ran),

607 F.3d 1017 (5th Cir. 2010) .................................................................................................17

Nevada Power Co. v. Calpine Corp. (In re Calpine Corp.),

365 B.R. 401 (S.D.N.Y. 2007) .................................................................................................21

FEDERAL:STATUTES,RULES,REGULATIONS,CONSTITUTIONAL PROVISIONS

11 U.S.C. 101(23), (24) ............................................................................................13, 14, 15, 16

11 U.S.C. 105(a) .....................................................................................................................1, 19

11 U.S.C. 1501(a)(1)(B)-(a)(4) .................................................................................................23

11 U.S.C. 1502(4) .......................................................................................................................16

11 U.S.C. 1516(c) .......................................................................................................................16

11 U.S.C. 1517 ................................................................................................................16, 17, 18

11 U.S.C. 1519(a), (e) .......................................................................................................1, 18, 19

Fed. R. Bankr. P. 1011(b) ..............................................................................................................24

Fed. R. Bankr. P. 2002(q)(1)..........................................................................................................24

Fed. R. Bankr. P. 9007 ...................................................................................................................24

Chapter X of the United States Bankruptcy Act of 1898 .........................................................15, 16

OTHER AUTHORITIES

H.R. Rep. 109-31, pt. 1 (2005) ......................................................................................................18



5/29

770349-v1\D

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9/29

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12/29

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2

(i) April

reports;

deadline

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2

substanti

ALDMS

(b)

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Relev3.

7, 2014, as

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to complete

mber 3, 201

If the4.al monetar

knowledg

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defenses,

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parties wi

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about Ma

and/or ins

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CoinLab

discovery

ant litigati

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2014, as th

discovery;

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and perso

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urrent finan

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including t

oinLabs

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conversion

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rch 17, 20

ection of

ubstantial

ch requires

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cutoff in th

n scheduli

to disclos

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f trial.

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nel resour

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the techn

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several de

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otions will l

discovery r

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014, as the

stayed in i

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ological de

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ositions to

s of Coin

ness devel

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mer funds.

ikely be fil

equest, a re

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re custome

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ion of expe

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the Coin

esses and

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file disposi

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13/29

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discover

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in place

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papers d

ALDMS

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f Illinois ac

emonstrate

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nd prepare

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ition of the

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about Febr

s action ha

ainst MtG

arch 5, 201

copy of t

it A. As c

His la

in the N

understoo

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to refer to

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preliminar

representi

oodrow at

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he followin

On Febru

in the Un

for depositi

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apan Proce

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ary 28, 20

been filed

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at email (

n be seen

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that Bak

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the CoinLa

ad filed a

y injunctio

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tached seve

n of those p

g:

ry 27, 2014

ited Stated

-9-

ns. Given

visional st

eding.

Action.

4, newspap

in the Unit

ividual na

MtGox re

ithout all

rom that e

sents Greg

rict of Illi

r &McKe

Western Di

Action.

otion for t

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in the ma

ral papers

apers are at

, Mr. Wood

District Co

the approac

y, even tho

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d States Di

ed Gregor

eived an e

ttachments

ail, Mr.

ry Greene i

ois agains

zie represe

strict of Wa

mporary re

ted to kn

ter.

hat his fir

ached heret

rows firm

rt for the

hing deadli

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Greene.

ail from a

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shington, w

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rted class

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nois,



14/29

-10-770349-v1\DALDMS

entitled Gregory Greene v. MtGox Inc., et al., Case No. 1:14-cv-1437

(N.D. Ill. Feb. 27, 2014) (the Greene Class Action and with the CoinLab

Action, the US Litigation Matters). A copy of the complaint is attached

to the Gamlen Declaration as Exhibit B. In the Greene Class Action, the

lead plaintiff seeks to represent two classes: (i) all persons in the US who

paid a fee to MtGox to buy, sell, or otherwise trade bitcoin; and (ii) all

persons in the US who had Bitcoins or currency stored with MtGox as of

February 7, 2014, when MtGox halted all withdrawals of currency or

Bitcoins.

(b) Four defendants are named in the Greene Class Action: (i) MtGox;(ii) MtGox, Inc.; (iii) Tibanne; and (iv) Karpeles. MtGox Inc. is a second

tier subsidiary of MtGox. It was formed in June 2013. It has never

conducted any business operations. The company was formed to, among

other things, operate certain US operations, including forming banking

relationships and obtain appropriate licenses in the US in light of

CoinLabs failure to be so licensed. In June 2013, it registered with

FinCEN as a money transmitter business. It has been in the process of

seeking to obtain state money transmitter business licenses. Tibanne is the

parent of MtGox and owns 88% of the shares of MtGox.

(c) The complaint asserts twelve causes of action against MtGox, MtGox,Inc., Tibanne, and Karpeles, including consumer fraud, fraudulent

inducement, negligence, breach of fiduciary duty, breach of contract,

unjust enrichment, trespass to chattels, conversion, for which the lead



15/29

770349-v1\D

2

claims a

Proceedi

such bit

will nee

ALDMS

(d)

(e)

The c8.

ise out of

ngthe the

oin to its c

d to expe

plaintiff

injunction

constructi

On Marc

restrainin

attached t

requests t

(including

customer

(ii) prohi

belonging

defendant

over the d

and the d

immediate

motion is

In additio

discovery.

laims assert

the same f

ft of MtGo

stomers.

d substant

s seeking

, a perman

e trust.

4, 2014,

order and

o the Gam

at the cour

any server

information

it the defe

to the clas

outstandi

efendants

fendants to

ly transfer

cheduled f

, in the mo

ed against

cts which l

customers

If the Gree

ial moneta

-11-

a tempora

nt injuncti

r. Woodro

reliminary

len Declara

: (i) freeze

or other co

regarding

ndants fro

members;

g liabilitie

ssets for th

hold such

hose assets

r March 11

tion referre

tGox in th

ed to MtG

bitcoin an

e Class Ac

y and pe

ry restrain

n, an acco

s firm fil

injunction (

tion as Ex

any of the

mputer equi

itcoins or

transferri

(iii) provid

s; and (iv)

e exclusive

ssets in tru

to the class

, 2014.

to above

Greene Cl

xs insolv

MtGoxs

tion is not

sonnel res

ng order

unting, and

ed a motion

TRO), of

ibit C. T

defendants

pment in th

urrency ac

g any bit

an accoun

impose a

benefit of t

st for the cl

members.

laintiff is s

ass Action i

ncy and fil

onsequent i

tayed in its

urces to

and preli

imposition

for a temp

copy of wh

he TRO

assets in t

US upon

ounts is st

oin or cur

ting of all

onstructive

e class me

ss member

A hearing o

eeking exp

ndicate that

ing of the

nability to

entirety,

efend bot

inary

of a

orary

ich is

otion

e US

hich

red);

ency

f the

trust

bers

s and

n the

dited

such

apan

eturn

tGox

the



16/29

-12-770349-v1\DALDMS

TRO/preliminary injunction motion (including its request for expedited discovery) as well as to

defend the litigation on the merits. Among other things:

(a) The request for expedited discovery, if granted, will require MtGox todivert substantial personnel resources to comply, as well as substantial

attorney fees at the same time MtGox is trying to devote its resources to

assisting in the Japanese Proceeding.

(b) Preliminary injunction papers will have to be prepared.(c) Once defendants are served, responses to the complaint will have to be

prepared. The issues involved in the Greene Class Action have only

occurred recently, may not yet be fully understood, even by MtGox, and

are of a highly technical nature. A fair understanding of them will have to

gained in order to meaningfully respond to the complaint. That will

require substantial resources and attorney fees.

(d) Potentially complex and technical class certification issues will belitigated. Among other things, the claims are based on Illinois state law

and involve issues of individual reliance.

(e) Depositions will likely have to be taken of one or more MtGox personnelin order to understand cause and extent of the bitcoin loss. Yet, these are

the same issues that are already being investigated in the Japan

Proceeding.

(f) Experts may well have to be retained.



17/29

770349-v1\D

II.

2

Code as

Tbat

11 USC.

3

Mr. Nob

March 9,

JCRA a

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of MtGo

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101(24).

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2014, Mr.

d by order

ecutive Off

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GUMENT

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18/29

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19/29

770349-v1\D

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-15-

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20/29

770349-v1\D

4

supervis

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main int

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4

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absence

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cy Code.

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as a forei

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of evidence

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cy Code d

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ision that

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tates conce

. 627, 629

of evidence

MtGoxs

iner, who

il a trustee i

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Proceeding

apan Proce

pan Procee

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11 USC.

to the contr

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hrase cen

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e determina

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pal place o

. Cal. 200

rary, the de

-16-

subject to

red his aut

apan Proce

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gn proceedi

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a main p

in the cou

ection 151

ors registe

1516(c);

4 B.R. 122

s AG, 384

interest

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ee In re Be

S.D.N.Y. 2

tion of CO

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business

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btors regis

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101(23) ar

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try where t

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red office

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, 127 (Ban

.R. 34, 43

COMI) i

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bilitation o

satisfied,

ired by sec

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foreign

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re Bear Ste

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(Bankr. D.

s a term o

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igh-Grade

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389

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the

ere a

redit

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Ltd.,

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21/29

770349-v1\D

case of

1516(c

office is

4

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Stearns,

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the site

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entered

the requ

mandato

ALDMS

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not its CO

In La5. several

ters; the lo

assets; the

who would

utes. (citi

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ters; the loc

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ity for CO

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in MtGoxs

517 of the

. TheSecti7.

if all of the

irements fo

y, unless g

l, is presu

sumption

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vie v. Ran

actors rele

ation of tho

location of

be affecte

ng In re Sp

129; In re T

ation of a d

olling law a

erring to

I analysis).

xs COMI

ocated in T

d sole dire

COMI, it q

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etitioner is

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requiremen

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ant to the

se who act

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inX, 351 B

adex, 384

ebtors man

re importa

ear Stearn

is clearly

okyo, Japa

ctor, reside

alifies for

ode.

Entitled to

tes that an

s for recog

n are satis

nition woul

-17-

e center of

overcome

, 607 F.3d

COMI a

ally manag

of the de

; and/or th

.R. 103 (Ba

.R. at 43 (

agement; th

t in determ

and Trad

apan unde

. Most of

in Japan.

ecognition

Relief Pur

order reco

ition have

ied, recog

d be funda

the debtor

by evidenc

1017 (5th

alysis: th

e the debtor

btors credi

jurisdictio

kr. S.D.N.

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e location o

ining COM

ex and als

all of th

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Thus, beca

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uant to Se

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entally aga

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that the d

ir. 2010),

e location

; the locatio

tors or of

n whose la

. 2006)); s

s as the loca

f its assets a

I.); In re

to cases

relevant c

ersonnel, in

use the Jap

main proce

tion 1517.

oreign proc

ee 11 USC.

section 15

inst public

ests. 11

btors regi

the Fifth C

of the de

n of the de

majority

would ap

e also In re

tion of a de

nd creditor

etcorp Ltd.

in the Eur

riteria. Mt

cluding its

n Proceedi

ding pursu

eeding sh

1517. If

17(a) and

olicy pursu

.S.C.

tered

ircuit

tors

tors

f the

ly to

Bear

tors

; and

, 400

pean

oxs

hief

ng is

nt to

ll be

all of

b) is

nt to



22/29

770349-v1\D

section

grant rec

. . . [t]he

also In r

exceptio

to the pu

invoked

the Unit

4

shares

the forei

policy.

(grantin

under J

Japan A

Proceedi

recogniti

III.4

under s

Proceedi

Fpuc

ALDMS

506 of the

ognition is

requiremen

Ran, 607

which per

blic policy

only under

d States.).

The J8.

any of the

n main pro

See, e.g.,

recognitio

RA); In re

rlines Cor

ng satisfies

on should t

HE ISSUA

UTOMAT

As se9.ction 1517

ng as a fore

rom the tietition, thergently neeeditors, gra

Bankruptcy

ot depende

s of this se

.3d at 102

its a court

f the Unite

xceptional

RA was m

ore objecti

ceedings co

n re Elpida

of foreign

Spansion L

., No. 10

all of the r

erefore be

NCE OF P

C STAY T

forth abov

recognizin

gn main pr

e of filingourt may, aed to prot

nt relief of a

Code. Se

t upon any

tion . . . are

([t]his st

to refuse re

States. 1

ircumstanc

odeled after

es of the

mmenced u

Memory, I

ain procee

d., No. 09-

10198 (Ba

quirements

ranted.

OVISION

O PROTE

, it is likel

g Mr. Kar

ceeding. S

a petitiont the requesect the assprovisional

-18-

H.R. Rep.

findings ab

all that mu

tutory man

ognition i

U.S.C. 1

s concerni

Chapter IX

ankruptcy

der the JC

nc., No. 12

ding where

1480 (Ban

kr. S.D.N.

to be desig

AL RELIE

T MTGO

that MtGo

eles as its

ction 1519(

for recognit of the forets of thenature, incl

109-31, pt.

out the natu

t be fulfille

ate is subj

the action

506. But, t

g matters o

of the U.S.

ode. Cou

A are not

-10947 (Ba

company s

r. D. Del.

. Feb. 17

ated as a f

F INCLU

IS APPR

will be su

foreign r

a) provides,

ion until tign represeebtor or iuding

. 1 (2005) (

re of the for

d to attain r

ct to a narr

ould be m

e exception

fundament

Bankruptc

ts have rou

anifestly a

nkr. D. Del

ught reorga

ay 28, 20

2010) (sa

oreign mai

ING IMP

OPRIATE.

cessful in o

presentativ

in pertinen

e court rultative whe the intere

The decisi

eign procee

cognition.

ow public

nifestly co

is intended

al importan

Act of 189

inely recog

gainst US

. Apr. 24,

nization in

09) (same);

e). The

proceeding

SITION O

btaining an

and the

part:

es on thee relief ists of the

on to

dings

); see

olicy

trary

to be

e for

8 and

nized

ublic

012)

apan

In re

apan

, and

F

order

apan



23/29

770349-v1\D

(

(latp

5

section

protectio

appropri

Order, t

pending

5

relief o

court rul

debtor o

105(a), t

carry out

5

105(a) a

the issua

2011) (c

(injunct

the usua

(Bankr.

ALDMS

) staying e

) entrustincated in tthorized be value of

erishable, s

The s0.519(a). S

n of the au

te to issue

ensure tha

ssuance of

Secti1.

a provisio

es on that

the intere

is Court h

the provisi

In or2.d 1519(a)

nce of a pre

iting In re

ions issued

rules for

.D. Wash

ecution aga

the adminie united s the court,assets that,bject to dev

tandards ap

e 11 USC.

omatic sta

provisional

t MtGox, it

hat stay.

n 1519(a)

al nature

etition, wh

t of the cr

s broad aut

ns of [the

er to recei

f the Bankr

liminary inj

Commonw

under 105

he issuance

. 2006) (not

inst the deb

stration or rtates to thincluding aby their naaluation or

licable to

1519(e).

of section

automatic

s United St

of the Ban

rom the tim

ere such rel

ditors. 11

ority to is

ankruptcy

e automati

uptcy Code,

unction. S

alth Oil R

outside of

of an inju

ing that sec

-19-

ors assets;

ealization o foreign r examiner,

ture or bectherwise in

n injunctio

After rec

362 pursua

tay relief

tes assets,

ruptcy Co

e of a petiti

ief is urge

USC. 15

sue any ord

ode]. 11

relief on

a debtor m

e, e.g., In r

fining Co.,

plan of re

ction.));

tion 1519 a

all or partpresentativ in order toause of othjeopardy . .

apply to t

gnition, M

nt to sectio

ending the

and the Ja

e expressl

on for reco

ntly needed

19(a). Addi

er . . . that i

SC. 105(

a provision

ust comply

Vitro, 455

805 F.2d

rganizatio

In re Ho S

uthorizes d

of the debte or anothprotect aner circumst.

e relief to

tGox will

1521(a)(1

issuance of

an Proceed

permits th

nition until

to protect

tionally, pu

s necessary

a).

l basis pur

with the sta

B.R. 571 (

1175, 1188

may be gr

ok Lee, 34

scretionary

rs assetsr personpreservences, are

be granted

e entitled t

. It is the

the Recog

ng are prot

e Court to

the time th

the assets

rsuant to s

or appropri

suant to se

dards gove

ankr. N.D.

(5th Cir.

nted only

8 B.R. 799

relief durin

nder

o the

efore

ition

ected

grant

t the

f the

ction

te to

tions

rning

Tex.

986)

nder

, 802

g the



24/29

770349-v1\D

period b

10423 (

granting

Corp.,

10-1113

establish

a foreig

below,

policy w

5

therefore

Litigatio

Circuit

success

(iii) whe

and (iv)

B.R. at

also In r

5

foreign

success

ALDMS

tween petit

ankr. D.

provisional

o. 11-1407

(Bankr. D.

ed that he is

main proc

tGox will s

eigh in favo

. MtG MtGo3.

be afforde

Matters.

onsider fo

n the merit

her grantin

whether gr

80 (citing

Common

1.Beca4.

ain procee

n the meri

on filing to

Del. Feb.

relief to de

(Bankr. D.

. Del. Apr. 1

likely to su

eding and h

uffer irrepar

of the gra

x Satisfies

x has comp

provisiona

Generally,

r factors: (

s; (ii) wheth

preliminar

nting the p

inter v. N

ealth Oil., 8

Likelihoo

se it is lik

ing, at whi

s has been

petition rec

1, 2011) (

btor pursua

Del. Dec. 2

9, 2010) (s

cceed on hi

imself reco

able harm i

ting of such

ll Requir

lied with al

l relief, incl

in deciding

) whether

er the mova

y relief will

eliminary r

tural Reso

05 F.2d at 1

d of Succes

ely that M

h point the

demonstrat

-20-

ognition); s

applying p

nt to sectio

8, 2011) (sa

me). For t

petition to

nized as fo

such relief

relief.

ments for

l of the req

uding in th

whether to

he movant

nt will be i

result in ev

elief will b

rces Defen

188.

on the Me

Goxs Jap

section 362

d. See, e.

e also In re

eliminary i

s 105 and

me); In re

e reasons s

have the Ja

reign repres

is not grant

njunctive

uirements f

form of a

grant an i

has shown

reparably i

en greater

in the pu

se Council,

rits.

n Proceedi

automatic s

., In re M

Wellpoint

njunction r

1519); In r

rant Forres

et forth abo

an Proceed

entative. Fu

ed and all e

elief.

or an injun

automatic

junction, c

a reasonab

jured by de

arm to the

lic interest.

Inc., 555 U

ng will be

tay will pro

G LLC, 2

ys. Inc., N

equirement

Crystallex

Prods. Inc.

e, Petition

ng recogniz

rther, as set

uities and

tion, and s

tay as to t

urts in the

le probabili

nial of the

onmoving

In re Vitro

.S. 7 (2008

recognized

ect its US a

6 B.R. 544

. 11-

and

Intl

, No.

r has

ed as

forth

ublic

ould

e US

Fifth

ty of

elief;

arty;

, 455

); see

as a

ssets,

, 552



25/29

770349-v1\D

(Bankr.

that cour

5

not stay

need to

discover

Power C

creditor

aid guar

restructu

harm fo

not only

would al

Airlines

Chapter

assets).

5

and mus

stay, eve

the near

resource

consiste

proceedi

ALDMS

.D.N.Y. 2

t would gra

2.MtGo5.

d. If the C

pend subst

requests,

o. v. Calpin

rom litigati

ntors defe

ring efforts

nd where

all the legal

so be diver

Corp., No.

15 debtors

In sh6.

defend a T

n though th

uture. Thi

that othe

tly held th

g constitut

00) (likelih

t comity to

Irrepara

x will face

oinLab Mat

ntial time

nd workin

Corp. (In r

g against

se, causing

); In re R&

d]ebtor wo

costs of [s

ed in assist

10-10198 (

US assets

rt, MtGox

RO motion

automatic

will furthe

wise could

t the pre

s irreparabl

od of succ

debtors for

le Harm.

mmediate a

ter is allow

reparing fo

with coun

e Calpine C

hapter 11 d

significa

Fin. Corp

ld be the e

bsidiarys]

ng towards

ankr. S.D.

ould be su

discovery

on March 1

tay will be

distract for

be availa

ature pieci

e injury. I

-21-

ess on meri

eign insolve

nd irrepara

d to proce

r and atten

el and exp

orp.), 365

ebtors gua

t burden a

., 441 B.R.

tity legally

efense . . .

the prepara

.Y. Jan. 2

ject to cre

preparation

1, 2014 in t

in place up

the reorga

le for the

g out of pr

re Lines, 8

s was dem

ncy procee

le harm if t

d in any re

ing deposi

rts to draft

.R. 401, 41

antor becau

d distractio

at 411 (Ban

and financi

but also its

tion for suc

, 2010) (ir

itors effor

must begin

e Class Ac

n recogniti

ization effo

benefit of

operty invo

1 B.R. 267,

nstrated w

ing).

he US Litig

spect, MtG

ions, prepa

expert repo

(S.D.N.Y.

se debtor w

of key e

kr. D.P.R. 2

ally respon

limited ma

h proceedin

eparable ha

s to control

now in the

ion if there

n of the Ja

rt and result

all credito

lved in a fo

270 (Bankr.

ere it was

ation Matte

x personne

ing respon

rts. See N

2007) (enjo

ould be forc

ployees fro

010) (irrep

ible in pro

agerial reso

gs); In re

rm shown

or possess

CoinLab

is no provi

an Proceedi

in a diversi

s. It has

reign liqui

S.D.N.Y. 1

ikely

s are

l will

es to

vada

ining

ed to

m its

rable

iding

urces

apan

here

such

atter

ional

ng in

on of

been

ation

988).



26/29

770349-v1\D

It has al

the fair

825 F.2

litigatio

represen

maximiz

1991).

5

extends

Petitione

the Unit

be fulfill

5

whereve

Matters

the Japa

necessar

MtGox

employe

discover

the Appl

5

the US

ALDMS

o been held

istribution

709, 714

to go for

ative to a

ng value f

Unde7.to all asse

r is requesti

d States, s

ed.

MtGo8.

situated, b

o go forwa

Proceedi

to MtGox

lso require

s, includi

, and other

cation is no

3.The b9.

itigation

that harm t

f assets are

2d Cir. 19

ard would

default jud

r the estat

the Tokyo

s wherever

ng this Cou

that the re

xs succes

e resolved

d thus prej

g. Given

s reorganiz

s the stewa

g Karpeles

wise overse

t granted, it

Balance o

alance of th

atters will

o an estate

disrupted.

7). Finall

i) threaten

gment, an

s creditor

Court Orde

located, i

rts assista

rganization

ful rehabil

s part of t

dices other

MtGoxs c

tion effort

dship of it

, cannot b

eing the US

is likely tha

f Hardship

hardships

uffer little

-22-

xists where

ee Victrix

, irreparabl

the assets

/or (iii) di

. In re Ger

rs, the stay

cluding as

ce to stay a

goals that

tation req

e foreign p

creditors o

urrent liqui

nd cannot

s key empl

e distracte

Litigation

t MtGoxs e

.

ecidedly fa

or no harm

the orderly

S.S. Co., S.

e harm has

f a foreign

ert funds

cke, 122 B

that is in p

ets located

ny action o

re intrinsic

ires that t

roceeding.

MtGox, w

dity concer

e diverted t

oyees in th

by atten

Matters. In

state will b

vors MtGo

as a result

determinati

A. v. Salen

been foun

estate, (ii)

needed for

.R. 621, 62

ace in the

in the U

proceedin

of the Japa

he claims

Allowing t

hose claims

ns, all pote

o litigation

e Japan Pr

ing dispos

short, if th

substantial

, because t

of the requ

on of claim

Dry Cargo

where all

subject a fo

the purpo

(Bankr.

apan Proce

ited States.

s by credit

Proceedin

of all cred

e US Liti

will be he

ntial saving

osts at this

ceeding.

tions, prep

relief sou

y diminish

e other part

ested stay

s and

A.B.,

wing

reign

e of

.D.C

eding

The

rs in

can

itors,

ation

rd in

s are

time.

hese

aring

ht in

d.

ies to

f the



27/29

770349-v1\D

proceedi

upon rec

in the U

also pre

place.

granted

without

re W.R.

finding t

6

requeste

1501(

dealing

courts a

cases . .

Integrate

bankrupt

interests.

6

on a pro

the Unit

ALDMS

gs. This C

ognition of

Litigation

ent the wa

ertainly, no

he full ben

he distracti

Grace & C

at relative

4.Grant0.

by the P

a)(1)(B)-(a)

ith cases

d other co

. [and] prot

d Health S

cy case, pr

).

Acco1.

isional basi

d States pe

urt will si

the Japan P

Matter will

ting of thei

creditor or

efit of a br

n that woul

o., 386 B.R

hardship of

Public In

ing the App

etitioner ad

(4). (The p

f cross-bor

petent aut

ction and

rvs., Inc.,

omoting a

dingly, it is

s, to tempor

ding recog

ply be pro

oceeding p

also benefi

resources

party to th

eathing per

result if t

. 17, 33 (B

the parties

erest.

ication is cl

vances the

urpose of th

er insolve

orities of f

aximizatio

58 B.R. 9

uccessful r

respectfull

arily halt th

ition.

-23-

iding the s

rsuant to s

from the r

efore the s

US Litigat

od to allo

e US Litiga

nkr. D. D

avors the [

early in the

express p

is chapter i

cy with th

reign count

of the valu

, 108 (Ban

eorganizati

requested

e US Litiga

me relief t

ection 1520

equested pr

tay under s

ion Matters

it to focu

tion Matter

l. 2008) (w

]ebtors).

public inter

rpose of

to . . . prov

objectives

ries involve

e of the de

kr. D. Del.

n is one o

that this Co

ion Matters

MtGox th

a)(1). As

visional st

ction 1520

will be har

s on its res

were to pr

eighing pot

est because

hapter 15.

ide effectiv

of coopera

d in cross-b

tors assets.

2000) (In

the most

urt apply th

to protect

t will be gr

result, plai

y because i

a)(1) come

med if Mt

ructuring e

ceed. See a

ential harm

provisional

See 11

mechanis

tion betwee

order insol

.); see also

the context

important

e automatic

tGoxs ass

anted

ntiffs

t will

into

ox is

fforts

so In

s and

relief

SC.

s for

n the

ency

In re

of a

ublic

stay,

ets in



28/29

770349-v1\D

IV.6

filing of

that a pa

a Chapte

prescrib

6

recogniti

is served

three bu

6

Hearing

or after

time for

Recogni

(i) the D

to the U

of Texas

The Peti

6

required

discreti

435 F.3d

ALDMS

HE PROP

Bank2.a Chapter 1

ty is to be

r 15 petitio

the time, f

Bank3.on under C

. Fed. R. B

iness days

As s4.

be schedule

arch 31, 2

objections t

ion Hearin

btor; (ii) M

Litigation

; and (v) su

ioner propo

Such5.parties wit

n to set th

891, 892 (8

SED NO

uptcy Rule

5 petition. F

iven 21 da

. Fed. R. B

rm and ma

uptcy Rule

apter 15 sh

nkr. 1011(

f the date o

t forth in

for a date

14. This w

the Petitio

, together

r. Nobuaki

Matters; (iv

h other par

ses to notify

notice meet

in the pros

particulari

th Cir. 2006

ICE AND

1011(b) pro

ed. R. Bank

s notice of

ankr. P. 200

ner in whic

1011(b) als

all file such

). The Peti

the order g

the Applic

o be deter

ill provide t

, if any, to

ith any o

obayashi,

) the Office

ties as the

the Notice

the requir

cribed time

ies of notic

).

-24-

EARING

vides that a

r. P. 1011(b

a hearing t

2(q)(1). Ba

notice sha

o provides

objection

tioner prop

ranting the

tion, the P

ined and ag

he required

be received

der grantin

s superviso

of the Unit

ourt may d

Parties by e

ments of R

period, an

e procedure

ON RECO

party be pr

). Bankrup

consider g

nkruptcy R

ll be given.

hat any par

ithin 21 da

ses to serv

pplication.

etitioner re

reed upon b

21 days n

in advance

the Appli

r and exami

d States Tr

irect (colle

mail, facsi

ule 2002(q)

it is also

s pursuant

GNITION.

vided 21 d

tcy Rule 20

anting the r

le 9007 pe

Fed. R. Ba

ty objecting

ys of that u

notice of t

quests that

y the Court

tice and wil

of the heari

cation, will

ner of MtG

stee of the

tively, the

ile, and/or

because it i

in keeping

to Rule 90

ys notice

2(q)(1) pro

elief reques

mits the Co

kr. P. 9007.

to a petiti

on which

e Petition

the Recog

and Petitio

l allow suff

g. Notice

be provid

x; (iii) all p

Northern D

Notice Part

express mai

s provided

with the C

7. In re P

f the

vides

ed in

urt to

n for

otice

ithin

ition

er on

cient

f the

d to:

arties

strict

ies).

.

o the

urts

erce,



29/29

6

the reco

Japan Pr

entry of

Matters

well as

intereste

Dated:

The6.

nition of M

oceeding as

an order pr

ursuant to

cheduling

parties.

March 9, 2Dallas, Te

etitioner re

r. Karpeles,

its foreig

visionally

sections 10

he Recogni

14as

CO

pectfully s

as MtGox

main proc

pplying th

(a) and 15

ion Hearin

CLUSIO

bmits that t

foreign r

eding. Th

automatic

9(a) pendi

and appr

Respectfull

BAKER &

By: /s/D

DaviStateJohnState23002001DallTeleFacsEmaEma- andErinIllin300Chic

TeleFacsEma

Atto

Mar

MtG

he Petition

presentativ

e Petitioner

stay of sect

g issuance

ving the fo

y submitted

McKENZ

avid W. Par

d W. ParhaBar No. 15MitchellBar No. 24

TrammellRoss Avens, Texas 75hone: (214mile: (214)l: david.pal: john.mit

-

E. Brodericis Bar No.ast Randol

ago, Illinois

hone: (312mile: (312)l: erin.bro

neys for the

Karpeles,

x Co., Ltd.,

satisfies the

, and for r

further res

ion 362 to t

of the Reco

rm and ma

,

E LLP

ham

459500

056313row Cente

ue201) 978-3000978-3099rham@bakehell@bake

k (pro hac v295974

ph Drive, S60602

) 861-8000861-2899erick@bak

Petitioner

Foreign Re

a/k/a MtG

requiremen

ecognition

ectfully re

he US Liti

gnition Ord

ner of noti

rmckenzie.mckenzie.c

ice pending

ite 5000

rmckenzie.

obert Mari

resentative

x KK

ts for

f the

uests

ation

er, as

ce to

omom

om

e

of


memorandum of law in support of petition for recognition

Documents