A bankruptcy case currently working through the courts in California is one of the more complicated cases the U.S. Bankruptcy Court has seen in a while. It also serves as a reminder of how necessary it is to utilize a bankruptcy attorney whether you are choosing to file chapter 13 or chapter 7 proceedings. Bankruptcy is a complicated legal matter that could lead to more trouble than it’s worth should you attempt to file by yourself.
The California case involves a bankrupt technology company and one of its former advisers and promoters. The company, known as HashFast Technologies, filed for bankruptcy in 2014. The bankruptcy trustee went on to request that former sponsor and advisor Dr. Marc Lowe return some 3,000 Bitcoin he was paid to promote the company’s hardware. That amount of Bitcoin is worth more than $1 million at this point.
Lowe’s lawyers said he has no intention of returning the Bitcoin, claiming that it is legitimate currency that was used to pay the commissions Lowe and the company agreed to in their memorandum of understanding. The trustee believes otherwise. He claims that Bitcoin is a commodity rather than currency, despite the fact that it can be used to pay for goods and services. It is the trustee’s position that Lowe, as a former advisor and paid sponsor of HashFast, should suffer equally in the demise of the company.
Complicating matters is the fact that there is no case law governing how digital currencies like Bitcoin are to be treated in bankruptcy. It presents a unique case for U.S. bankruptcy judge Dennis Montali. It is a case that could have a long-lasting impact on bankruptcy proceedings.
Getting Your Bankruptcy Wrong
The average citizen is not likely to be dealing with a bankruptcy that involves millions of dollars in digital currencies. However, that does not mean the average bankruptcy is any less complex. Both individual and corporate bankruptcies must consider things such as cash assets, real property, dischargeable and non-dischargeable debt, and so on.
Where personal bankruptcies are concerned, there is a very strong temptation among those in financial trouble to file a bankruptcy proceeding by themselves in order to avoid paying attorney’s fees. This is never a good idea. As we have pointed out in previous posts, there are too many risks involved in a DIY bankruptcy to make filing by yourself worthwhile.
For example, the paperwork required in a personal bankruptcy is subject to very strict filing dates. If an individual were to miss just one of those dates, the bankruptcy court could simply dismiss the case for no other reason. It actually happens more than most people realize.
Another problem is attempting to file for a chapter 7 bankruptcy when you are really not eligible to do so. Going through all of that trouble only to find out in court that you should have filed chapter 13 instead can be maddening. It is also expensive. You have to start all over again, spending more money to do it right.
You may not be dealing with millions of dollars in Bitcoin and a bankrupt technology company that wants it back. But if you are considering bankruptcy, we encourage you to contact our law offices. We are experienced bankruptcy attorneys more than capable of representing you in your case. We are the experts, let us make sure your bankruptcy is done right the first time.