A US judge has dismissed crypto neobank Banq’s bankruptcy case.
Background
- The firm filed for Chapter 11 bankruptcy in June last year in the district of Nevada
- The Judge branded the whole stunt to be a "bad faith" tactic
- She said it was set to motion to “gain an advantage in pending litigation”
Why should you pay attention?
- The ulterior motive of the bankruptcy filing was to shield Banq and its founder, Jon Jiles, from an investor lawsuit launched by N9
- N9, in its turn, is a key creditor of the firm with a $3 million stake
- The suit claims that Jiles prioritized Prime Trust's interests — he was the founder and managing member there too — over Banq’s
- The executive ultimately used his control powers at Banq to help benefit Prime Trust
- That ultimately paved the path to Banq's downfall
Who said what?
- The judge wrote,
“It is apparent from the totality of the circumstances that Debtor’s actual purpose in filing this case is not to successfully reorganize”
- Judge Natalie Cox further claimed that Banq's bankruptcy plan was not a legitimate business reorganization
- This was because, she pointed out, the firm had no revenue streams
Zooming out
- The case was ultimately crafted to hinder the ability of N9 to go after Jiles for breach of fiduciary duty
- She concluded,
"In essence, this case appears to be filed as a litigation tactic to advance the self-interest of the Jiles parties”
