This story has been updated to reflect the possibility that all MtGox account holders are considered "unsecured creditors" whose rights may be altered under bankruptcy laws.
Additionally, MtGox has already filed under the Civil Rehabilitation Law
As you know, the bitcoins are gone and Mt. Gox has filed for bankruptcy, kind of.
Mt. Gox filed for bankruptcy protection, which has the possibility to end with a standard bankruptcy (as in liquidating all assets, company gone, scraps distributed to the creditors), but first the company is given the opportunity of going through a company "reorganization."
What reorganization does is provide the company tools to deal with its debts, such as protection against legal action, under court supervision. A successful reorganization leaves the company functioning normally and meeting all possible credit obligations, while an unsuccessful one - well, you can guess what happens then. Quite often a successful reorganization means arranging an acquisition of the failing company by a larger one who can shoulder the debt and pay any creditors, more than likely leaving out MtGox account holders.
The reorganization can happen one of two ways.
Japanese bankruptcy law, under the Civil Rehabilitation Law, allows the company to use its own management team in order to provide a plan for reorganization. Considering Mt. Gox management caused this catastrophe, we do not want this.
The other path, the Corporation Reorganization Law, demands that the court appoint a reorganization professional who has the power to sever ties with any executive deemed responsible for the company's failing. This professional is primarily responsible for finding a plan to meet debt obligations and resume normal operation for the company.
Based on Mark Karpeles own apologies and the widely accepted fact that Mt. Gox has poor management, The Corporation Reorganization Law will likely be the pursued path.
Both of these options provide the company temporary protection from lawsuits seeking financial reimbursement. Sorry guys.
Expect More Silence
One of the key differences between Japanese and American bankruptcies is that in Japan there is greater emphasis on preserving the company and the jobs/products it provides.
The court appointed trustee typically works with the debtor (Mt. Gox) in order to devise a plan by which they may continue operation in order to pay back their creditors. While this trustee works, they typically rely on private communication with the debtor and the courts. This system allows for the trustee to avoid media attention while handling the reorganization, it also provides the public fewer answers in the meantime.
The appointed trustee is not obligated to release operating reports as would be required under U.S. law, and the creditors are not permitted the chance to object to the trustee's actions, although the court is required to approve many of the trustee's actions.
Thus, do not expect weekly media frenzies like we have seen recently, assuming Mt. Gox' filing happens in a fairly standard manner.
Based on this helpful document, the typical timeline for corporation reorganizations lasts around six months, and goes as follows:
Pre-Filing: One to two weeks of debtor consultation with the court.
Day 1: Filing, entry of injunction order, appointment of a “provisional” trustee and private notice to creditors by the petitioner.
Week 3: Entry of a formal commencement order, appointment of a trustee and, as applicable, appointment of an examiner.
Week 9: Claims bar date.
Weeks 9 –20: Asset evaluation and claim examination period.
Week 21: Submission of a Plan of Reorganization. (This period may extend to as long as 52 weeks or more in complex cases. If so, all dates hereafter would be revised accordingly).
Weeks 21–25: Plan voting.
Week 26: Plan confirmation.
Thereafter: Implementation of the Plan until the significant majority of claim distributions have been paid. This can last anywhere from months to several years.
What Can We Do?
If you have funds in MtGox, please seek professional legal guidance regarding your options.
Scrape together every email from Mt. Gox, every piece of evidence showing you had funds in the exchange and start contacting people. This may entail becoming part of a multi-plaintiff suit. Search around Bitcoin Talk or Reddit for others in your position and network. If the funds you had in Mt. Gox were involved in any way with illicit activities, you are better off calling this a loss, considering that the FBI is well aware of how many Mt. Gox users did business on Silkroad. Even though bankruptcy proceedings may result in pending lawsuits being stayed, those recognized as creditors could see some repayment by corporate reorganization.
Best case scenario: Mt. Gox gets bought by BTC China, or an equivalent, at a huge discount. Mt. Gox is gutted for its client base and withdrawal limits are imposed for a short time. Perhaps lower-level employees remain employed.
Worst case scenario: No buyers are interested, the assets are trash, and creditors are reimbursed pennies on the dollar, if that.
At the end of the day, the bankruptcy filing amounts to light at the end of the tunnel, but hang in there fellow Bitcoiners - it's a very long tunnel.