Bittrex’s disclosure statement hearing scheduled for Sept. 26

By Sarah Lizee

Olympia, Wash., Aug. 31 – Desolation Holdings LLC, which does business as Bittrex, had the hearing on approval of the disclosure statement for its Chapter 11 plan of liquidation scheduled for Sept. 26, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

Objections are due by Sept. 21.

Under the plan, general administrative claims, debtor-in-possession loan claims and other priority claims will be paid in full.

Holders of Bittrex, Inc. customer claims and Bittrex Malta Ltd. customer claims will receive a distribution of like-kind cryptocurrencies to holders of customer claims by providing access to the debtors’ platform for withdrawal of 100% of the amount of cryptocurrencies associated with such customer’s account as of the petition date.

Customers will be required to pay any fees charged by third parties in connection with the withdrawal of cryptocurrencies, provided further that customer distributions are subject to non-economic crypto distributions, provided further that it may not be possible for customers to successfully withdraw defunct crypto.

Customers who have already withdrawn the full amount of cryptocurrencies associated with their accounts under the previous customer withdrawal order will not receive an additional customer distribution.

Holders of general unsecured claims will receive payment in cash in an amount equal to their claims no later than six months after the effective date.

Holders of subordinated claims will receive, after general unsecured claims have been paid in full, cash in an amount equal to the claims no later than six months after the effective date.

Existing interests in BUS will survive and continue to exist as interests in the wind-down entity, which entitles each holder of an allowed class 5 interest in BUS will be entitled to a pro rata payment of any remaining wind-down assets, if any, or the proceeds thereof after all allowed claims have been paid in full.

On the effective date, existing interests in all debtors, other than BUS, will be deemed canceled with no distribution.

The plan incorporates a settlement with the Securities and Exchange Commission, through which the company has agreed to pay $24 million. As previously reported, the SEC alleged that Bittrex and its co-founder and former chief executive officer, William Shihara, operated an unregistered national securities exchange, broker and clearing agency.

The customer claims, general unsecured claims, subordinated claims and interests are impaired, and holders in these classes are entitled to vote on the plan.

Bittrex is a cryptocurrency trading platform with headquarters in Seattle. The company filed bankruptcy on May 8 under Chapter 11 case number 23-10597.

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