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Comment by JumpCrisscross | Hacker News Reader

>The company's lawyer also said at a news conference at the Tokyo District Court that Mt. Gox had outstanding debt of about ¥6.5 billion ($63.6 million) with assets worth ¥3.84 billion.

This implies a debt ratio of 170%. Assume: (1) no outside debt (only customer deposits) and (2) only 100% liquid assets (only currency). Even in that case, a depositor would recover no more than 59 cents to the dollar (the maximum recovery rate).

Fifty-nine cents is clearly rose-tinted. Assets include office leases, computers, and other things not easily liquidated at book value. And outside debt is senior to deposits. That is the bite of being unregulated (deposits are at the top of regulated banks' capital structures). After factoring in the cost of chasing bankruptcy claims in Japan I do not see depositors recovering a penny.

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They're also staring down the barrel of last year's taxes, which are due in two weeks. (For filing - they might get an extra month to pay them.) They're almost certainly going to miss that deadline and the National Tax Agency is going to make some guesses as to their situation.

It would not be out of character for the NTA to say "You had $50 million in incoming wires? In the absence of a timely return accompanied by an income statement and balance sheet prepared in accordance with Japanese GAAP, we are forced to impute $50 million in income. Your bill comes to $20 million. Thank you for banking in Tokyo; we do so love not having to call the international desk to do collections."

> a depositor could expect to recover no more than fifty-nine cents to the dollar

59% is a wet-dream scenario. Apparently they are trying really hard to value the lost 750K BTC at the closing MtGox price which was around $100. And Bitcoin is actually $566 now. It looks more and more that if anyone gets anything at all it will be under 10 cents to the dollar.

>Apparently they are trying really hard to value the lost 750K BTC at the closing MtGox price which was around $100.

Comical. The equivalent of a shipper, having sunk its cargo, claiming the damages it owes are diminished by the cargo being worth less for having dropped to the sea floor.

Recovery in this case will most likely be in the underlying asset i.e. BTC.

Having knowledge of a ton of these situations what will actually reduce the payout/recovery substantially are:

a. The time it will take to recover => 2-5 years

b. The customers will be on the hook for all accountant and legal fees, which will easily erode 40-80% of the recovery amount

So the expected recovery would be in the range of 0.118btc - 0.354btc per 1btc.

The only saving grace to recover the USD value would be if at time of recovery BTC was trading at $1600 - $4796 USD/BTC.

My employer emerged from Ch. 11 bankruptcy a few months ago. Never underestimate legal fees and consultant fees. Japanese laws may be different, but I would be surprised if these fees did not consume a significant fraction of the assets.

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