U.S. Federal Bankruptcy Court Judge Janet Baer converted Bcause’s long six-month long Chapter 11 bankruptcy proceeding into a Chapter 7 bankruptcy under which the company will be liquidated. The U.S. Trustee has been asked to assign a trustee to oversee the liquidation.
All operations are to cease immediately, including Bcause’s third party support services for bitcoin miners and its own bitcoin mining operation. Bcause’s remaining staff members in Chicago and Virginia Beach were to be laid off immediately. The auction of Bcause’s spot market final bids for which are due Friday, October 11, is allowed to continue with any net proceeds to be turned over to the estate. The auction so far has attracted expressions of interest from three parties in addition to an insider group of company founders and board members.
Bcause entered voluntary bankruptcy on April 11 of this year. With $911,000 in cash and bills for $1.9 million and $1.7 million due to Wesco, an equipment supplier, and Dominion Electric, the local electricity company, Bcause’s Chicago bankruptcy pleading avoided seizure of its Chicago bank account after a Virginia court ordered payments. Since Bcause needed electricity to continue mining operations on behalf of customers, Dominion’s outstanding claims were settled. During the bankruptcy, the court ordered that Bcause prepay Dominion’s electric bills.
Wesco’s unsatisfied demands pushed the proceedings to today’s decision. Wesco said its claims were secured by the Virginia court’s payment order.
Bcause was founded a little more than two years ago to establish a bitcoin ecosystem, including mining support operations, a spot market, a futures market and a derivatives clearinghouse.
The bankruptcy is likely to leave unfulfilled demands from landlords, lawyers, and employees.