The bankruptcy cannot end until the Coinlab lawsuit is ended in some way. The feeling amongst many creditors is that Coinlab is gaming the system with a meritless claim for $75m and effectively holding up the bankruptcy in order to scoop up an exorbitant payoff from our funds.

Unfortunately, if their claim is accepted it would most probably have the same priority as those of the depositor creditors. This of course goes against conventional wisdom. If someone steals something from you and is caught by the authorities with it, you would expect the authorities to hand it back to you and not sell it to fund the personal debts or lawsuits of the thief.

In addition to the Right of Segregation mentioned in the previous article, bankruptcies have the concept of priority of claims to deal with this kind of situation. Some claims can be given “preferred” status and some “subordinate”. However, under Japanese law only certain types of claim can be preferred – such as wages, taxes, pensions, etc. Bitcoin deposits would not be included. Similarly, it’s unlikely the Coinlab lawsuit would be given subordinate status.

The trustee has been trying to dismiss the claim on the grounds that what Coinlab claims to be an agreement with MtGox is invalid. But it’s up to the district court and not up to the trustee. Coinlab is obviously fighting to avoid this. It could easily take a couple of years for a final ruling. That leaves everything in a long, slow stalemate for now. The trustee has the option of offering a settlement to end the claim and we don’t know yet whether this is his plan. This is most likely what Coinlab is aiming for.