A group of Central Valley-based investors seeking to recoup their money from Bitwise is seeking to move the bankruptcy court hearings to Fresno County.
The Chapter 7 bankruptcy case is currently being heard in the Delaware District Court, where Bitwise is incorporated.
The backstory: Bitwise filed Chapter 7 bankruptcy on June 28 in a Delaware federal court for itself and its affiliates: Bitwise Industries, Inc., BWRD, LLC, Alpha Works Technoloies, LLC, and Bruce’s Bagels, Beverages, and Bites, LLC.
- That came one month after the company furloughed its 900-person workforce as it financially collapsed. Founders and co-CEOs Jake Soberal and Irma Olguin were later fired by the Bitwise board and face numerous lawsuits.
- The Fresno-based investors seeking to recoup their investments are Agri Capital, CA AG, LLC, Rodger Glaspey, Eric Hanson, Amendola Investments and the Kimberly R. Hudson Revocable Trust.
The big picture: Tuesday, the debtors filed a motion in court to transfer the case from Delaware to the Eastern District of California Bankruptcy Court.
- Bitwise’s Chapter 7 liquidation bankruptcy filing differs from the typical Delaware-centric Chapter 11 reorganization filing. Those reorganization bankruptcies typically involve at least hundreds of creditors across the nation. In the case of Bitwise, most are Central Valley-based investors or within a close distance to the Eastern District Court located in Fresno – which is also where Bitwise was headquartered.
- The investors argue that Agri Capital is owed $1.12 million, CA AG is owed $560,000, Rodger Glaspey is owed $1.15 million, Eric Hanson is owed $600,000, Amendola Investments (owners of beer dValley Wide Beverage) is owed $3.6 million and the Kimberly R. Hudson Revocable Trust is owed $720,000.
What we’re watching: The group of investors is also seeking to elect James Salven as the permanent trustee in the Chapter 7 cases. Salven is currently on the Chapter 7 Trustee panel for Fresno.
- That election is scheduled to take place on Thursday at noon.
What they’re saying: In the lawsuit, the investors – known as the Ad Hoc Committee – said that the decision to file the bankruptcy cases across the country raises the question that Bitwise could be forum shopping in an attempt to evade accountability.
- “To the Ad Hoc Committee, it is remarkable that those controlling the venue decision would choose Delaware over California and it begs the question of what motive drove the venue decision in these cases other than to be in a jurisdiction as far away from the debtors’ assets, former management and insiders, former employees, customers, and trade creditors in California,” the lawsuit reads.