A New York-based bitcoin company affiliated with Bitcoin Center NYC has filed for Chapter 11 bankruptcy protection after months of legal wrangling.
A non-profit industry advocate founded last year, the World Bitcoin Association (WBA) has been embroiled in a legal dispute with its landlord over site issues at 40 Broad Street, a building that also houses Bitcoin Center NYC.
The organization claimed between $100,000 and $500,000 in liabilities, and up to $50,000 in assets, according to court documents obtained by CoinDesk. The filing also states that the company expects to have enough funds to pay unsecured creditors, with a creditor meeting scheduled for 17th April.
The legal situation involving WBA may see further developments in the days ahead, as according to Bitcoin Center NYC co-founder Nick Spanos, the company is planning to file to have the bankruptcy petition dismissed.
In an interview, Catafago said of the landlord’s behavior toward his client:
“In 30 years, I’ve never seen a landlord behave as poorly as this landlord.”
The WBA first filed suit against its landlord, 40 Broad Associates No 2 LLC, in October 2014, and is being represented by New York attorney Jacques Catafago in those proceedings. For its separate bankruptcy case, the WBA is being represented by New York-based law firm Shafferman & Feldman LLP.
Thousands in damages
The WBA accused the landlord of failing to address water leakage problems which it alleges resulted in thousands of dollars in damages and operational complications. In its original lawsuit, the WBA sought $100,000 in damages as well interest and court fees.
The landlord countersued in civil court later that month, seeking to evict WBA from the premises. That court agreed, but an appellate court later put in place a stay of proceedings, requiring the WBA to pay a $150,000 bond.
Rather than paying the bond, Catafago told CoinDesk, the WBA filed for bankruptcy protection.
The issues with the landlord center on both operational and contractual concerns. Court documents submitted last fall allege that in addition to unaddressed leaks, the landlord put scaffolding in place that the plaintiffs claim adversely affected their ability to operate.
The filing notes:
"Plaintiff has fully performed all of its obligations under the lease agreement, but without justification, defendent has violated and threatens to continue to violate plaintiff's contractual rights by: (a) failing to repair serious leak condition in the premises; (b) erecting scaffolding outside the demised premises which has adversely affected plaintiff's business; and (c) refusing to provide the 10-year extension as required and instead serving a 30-day Notice of Termination."
Subsequent court filings allege that the landlord was actively aware of the site problems yet chose not to address them.
According to Spanos, the WBA was intended to serve as a companion company to the Bitcoin Center NYC. Declining to name specific partners, he explained that a withdrawal in support resulted in the company having to work with far more limited resources.
Coupled by the alleged conduct of the landlord, he said, the WBA was never able to act in its planned capacity and instead incurred costs that it is now seeking to recoup.
Court documents suggest that the landlord accused the WBA of operating as a shell company, allegations that Catafagos called "entirely unsubstantiated" in a filing dated 5th March.
A tale of two WBAs
Following the news that the WBA was delcaring bankruptcy, confusion emerged as to the exact nature of the company.
Some reports pointed to a WBA based in Zurich, founded around the same time as the New York-based WBA. That group’s website describes it as a non-profit dedicated to pooling efforts among global bitcoin-focused organizations. Its news and media page hasn’t been updated since shortly after the group’s announced creation in January 2014.
Spanos told CoinDesk that his company has no association with the Zurich-based group.
A representative for the Bitcoin Center NYC also denied the connection. The World Bitcoin Association of Zurich did not respond to queries by press time.
CoinDesk will continue monitoring this developing story and provide updates as they become available.
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A non-profit industry advocate founded last year, the World Bitcoin Association (WBA) has been embroiled in a legal dispute with its landlord over site issues at 40 Broad Street, a building that also houses Bitcoin Center NYC .
The organization claimed between $100,000 and $500,000 in liabilities, and up to $50,000 in assets, according to […]