Bitwise bankruptcy trustee pushes for mediation to reach ‘global settlement’ with creditors

Bankruptcy trustee Jeoffrey Burtch has also come out in opposition to moving Bitwise Industries’ bankruptcy to California from Delaware.

Lenders are looking to have a mediation process in the Bitwise bankruptcy hearings en route to a settlement. 

The hearing could also be adjourned for a few months to preserve the remaining assets that lenders can claim from Bitwise. 


The backstory: Bitwise filed for Chapter 7 bankruptcy in a Delaware federal court in late June, one month after furloughing its entire 900-person workforce. 

  • The failed real estate and tech company reported over $250 million in financial liabilities in its bankruptcy filing, as well as over $175 million in assets. 

The big picture: In a court filing, interim Trustee Jeoffrey Burtch asked for an adjournment of 90-120 days, giving more time for mediation while keeping Bitwise from using up the assets that lenders could claim. 

  • Former Bitwise directors Ollen Douglass and Joseph Proietti had filed to access up to $5 million from an insurance policy to pay for legal bills, as well as restricting access for former Bitwise CEOs Jake Soberal and Irma Olguin to the insurance policy. 
  • Burtch said in the filing that at least eight law firms which are representing former Bitwise executives could have their fees covered under the insurance policy. 
  • With that many law firms able to draw on the policy, lenders are seeking mediation to prevent the policy from drying up. 

What we’re watching: Even if Douglass and Proietti are given permission by the court to use the insurance policy, Burtch requested a $1 million cap for legal fees. 

  • Earlier this month Fresno-based lenders filed a motion to move the case from Delaware to Fresno County. In the filing, though, Burtch signaled his opposition to the move. 

What they’re saying: “All parties, including the Former Directors, appear to be amenable to moving forward with a mediation process to attempt to reach a global settlement of the various claims against the former officers and directors of the Bitwise Debtors,” the filing reads.

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