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David W. Parham State Bar No. 15459500 John E. Mitchell State Bar No. 00797095 2300 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201 Telephone: (214) 978-3000 Facsimile: (214) 978-3099 Email: david.parham@bakermckenzie.com Email: john.mitchell@bakermckenzie.com - and Erin E. Broderick (pro hac vice pending) Illinois Bar No. 6295974 300 East Randolph Drive, Suite 5000 Chicago, Illinois 60602 Telephone: (312) 861-8000 Facsimile: (312) 861-2899 Email: erin.broderick@bakermckenzie.com Attorneys for the Petitioner Robert Marie Mark Karpeles, Foreign Representative of MtGox Co., Ltd., a/k/a MtGox KK IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION ) ) Chapter 15 ) MtGox Co., Ltd. (a/k/a MtGox KK) ) Case No. 14-31229-15 ) Debtor in a Foreign Proceeding. ) ) In re MEMORANDUM OF LAW IN SUPPORT OF PETITION FOR RECOGNITION AND APPLICATION FOR PROVISIONAL RELIEF, SCHEDULING HEARING, AND APPROVING FORM AND MANNER OF NOTICE

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TABLE OF CONTENTS Page PRELIMINARY STATEMENT ................................................................................................... 1 I. BACKGROUND ............................................................................................................... 1 A. B. C. D. E. MtGoxs Business .................................................................................................. 1 MtGoxs Capital Structure ..................................................................................... 3 Business Challenges............................................................................................... 3 MtGoxs Japan Proceeding and Corporate Reorganization under the JCRA ........ 4 MtGoxs US Litigation Matters ............................................................................. 6 1. F. The CoinLab Action .................................................................................. 6

The Greene v. MtGox Class Action ....................................................................... 9

ARGUMENT ............................................................................................................................... 13 II. RECOGNITION OF MTGOXS FOREIGN REPRESENTATIVE AND FOREIGN MAIN PROCEEDING ARE APPROPRIATE ............................................. 13 A. B. C. D. III. Mr. Karpeles May Be Recognized as MtGoxs Foreign Representative ............. 13 The Japan Proceeding is a Foreign Proceeding ................................................... 13 The Japan Proceeding is a Foreign Main Proceeding .......................................... 16 The Petitioner is Entitled to Relief Pursuant to Section 1517 ............................. 17

THE ISSUANCE OF PROVISIONAL RELIEF INCLUDING IMPOSITION OF AUTOMATIC STAY TO PROTECT MTGOX IS APPROPRIATE ............................. 18 A. MtGox Satisfies All Requirements for Injunctive Relief .................................... 20 1. 2. 3. 4. Likelihood of Success on the Merits ........................................................ 20 Irreparable Harm ...................................................................................... 21 Balance of Hardships ............................................................................... 22 Public Interest .......................................................................................... 23

IV.

THE PROPOSED NOTICE AND HEARING ON RECOGNITION ............................. 24

CONCLUSION ............................................................................................................................ 25

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TABLE OF AUTHORITIES Page(s) FEDERAL CASES In re ABC Learning Centres Ltd., 445 B.R. 318, 328 (Bankr. D. Del. 2010) ...............................15 In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, 374 B.R. 122 (Bankr. S.D.N.Y. 2007), affd 389 B.R. 325 (S.D.N.Y. 2008) ...................16, 17 In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, 389 B.R. 325 (S.D.N.Y. 2008)...........................................................................................16, 17 In re Betcorp Ltd., 400 B.R. 266 (Bankr. D. Nev. 2009) ...........................................................................14, 15, 17 In re Ho Seok Lee, 348 B.R. 799 (Bankr. W.D. Wash. 2006) ................................................................................19 In re Integrated Health Servs., Inc., 258 B.R. 96 (Bankr. D. Del. 2000) ..........................................................................................23 In re Japan Airlines Corp., No. 10-10198 (JMP), 2010 WL 1050075 (Bankr. S.D.N.Y. Jan. 28, 2010) ...........................21 In re MMG LLC, 256 B.R. 544 (Bankr. S.D.N.Y. 2000) .....................................................................................20 In re Netia Holdings, S.A., 277 B.R. 571 (Bankr. S.D.N.Y. 2002) .....................................................................................14 In re R&G Fin. Corp., 441 B.R. at 411 (Bankr. D.P.R. 2010).......................................................21 In re SPhinX Ltd., 351 B.R. 103 (Bankr. S.D.N.Y. 2006) affd, 371 B.R. 10 (S.D.N.Y. 2007) ...........................19 In re Tradex Swiss AG, 384 B.R. 34 (Bankr. D. Mass. 2008) .................................................................................16, 17 In re Tri-Continental Exch. Ltd., 349 B.R. 627 (Bankr. E.D. Cal. 2006) .....................................................................................16 In re Vitro, 455 B.R. 571 (Bankr. N.D. Tex. 2011) ..............................................................................19, 20 In re W.R. Grace & Co., 386 B.R. 17 (Bankr. D. Del. 2008) ..........................................................................................23

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Lavie v. Ran (In re Ran), 607 F.3d 1017 (5th Cir. 2010) .................................................................................................17 Nevada Power Co. v. Calpine Corp. (In re Calpine Corp.), 365 B.R. 401 (S.D.N.Y. 2007).................................................................................................21 FEDERAL: STATUTES, RULES, REGULATIONS, CONSTITUTIONAL PROVISIONS 11 U.S.C. 101(23), (24) ............................................................................................13, 14, 15, 16 11 U.S.C. 105(a) .....................................................................................................................1, 19 11 U.S.C. 1501(a)(1)(B)-(a)(4) .................................................................................................23 11 U.S.C. 1502(4) .......................................................................................................................16 11 U.S.C. 1516(c) .......................................................................................................................16 11 U.S.C. 1517 ................................................................................................................16, 17, 18 11 U.S.C. 1519(a), (e) .......................................................................................................1, 18, 19 Fed. R. Bankr. P. 1011(b) ..............................................................................................................24 Fed. R. Bankr. P. 2002(q)(1)..........................................................................................................24 Fed. R. Bankr. P. 9007 ...................................................................................................................24 Chapter X of the United States Bankruptcy Act of 1898.........................................................15, 16 OTHER AUTHORITIES H.R. Rep. 109-31, pt. 1 (2005) ......................................................................................................18

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PRELIMINA P ARY STAT TEMENT 1. Rober rt Marie Mark M Karpel les (Karpe eles), in h his capacity as the fo oreign

represent tative (the Petitioner ) of MtGo ox Co., Ltd d. a/k/a Mt tGox KK (t the Debtor r or MtGox ), a debtor r in a civi il rehabilitat tion procee eding under Japanese law (the J Japan Proceedin ng), curren ntly pending before the Twentieth T Ci ivil Division n of the Toky yo District C Court, Japan (th he Tokyo Court), C subm mits this mem morandum i in support of his petition n (the Petit tion) under Ch hapter 15 of title 11 of th he United St tates (the Bankruptcy C Code) seeking recogniti ion as a foreign n representat tive, and rec cognition of the Japan Proceeding as a foreign m main procee eding, and entry y of an order substantial lly in the for rm attached d to the Verified Petition n for Recogn nition and Chap pter 15 Relie ef as Exhibit t A (the Re ecognition O Order), and in support o of his Applic cation for an Or rder Granting g Provisiona al Relief Pur rsuant to Sec ctions 105(a) ) and 1519 o of the Bankru uptcy Code, Sc cheduling Recognition R Hearing, and a Specifyi ing Form a and Manner r of Notice e (the Applica ation). 2. There are currentl ly two action ns pending a against the D Debtor in the e United Stat tes in

which the ere are near-approaching g court appe earances and d discovery d deadlines, inc cluding a he earing on injunc ctive relief against a the Debtor D on March M 11, 20 014. The Debtors parti icipation in these lawsuits during the short time before b the Court C rules on the Petit tion would wastefully d divert resources s away from m administra ation of the e Japan Pro ceeding. A Accordingly, the Applic cation seeks a stay of these actions to t avoid irr reparable ha arm to the administrati ion of the J Japan Proceedin ng. I. BACKGROU B UND. A. A 3. MtGo oxs Busines ss. MtGo ox is a Japan nese corpora ation formed in 2011. It is, and a always has been,

located in n Tokyo, Jap pan. Since it t was formed and up to February 25 5, 2014, it op perated an o online -1770349-v1\D DALDMS

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bitcoin exchange through the we ebsite mtgox x.com. MtG Gox has oper rated this ex xchange sinc ce the summer of 2011. There were tim mes during th his period th hat MtGox w was reported d to be the la argest nge in the wo orld, but tha at is no longe er the case. online bitcoin exchan 4. As se et forth in th he Declaration of the P Petitioner (t the Karpele es Declarati ion),

bitcoin is s a form of digital currency that was w first conc ceived of in n 2008 by a person or g group going by y the name of o Satoshi Nakamoto. N The first ac ctual bitcoin n was created, or mine ed in 2009. Th here are seve eral ways in which a per rson can obta ain bitcoin, i including the e following: o a created through a computer s software alg gorithm whic ch, at Bitcoins are any point in time, re esides on th housands of f computers on the Inte ernet. w accept to certify bitcoin tra ansactions o over the bi itcoin Persons who peer-to-pe eer network are a remunera ated by the i issuance of a fixed numb ber of bitcoins, which w evolve es over time. . The certifi ication is done by the so olving of an alg gorithm wit th the use of f ever-more powerful co omputers. T These persons ar re called m miners and the process s of obtainin ng bitcoin in n this fashion is called mini ing. A person can c also obtain bitcoins that have al lready been mined by bu uying them from m another. These tra ansactions c can consist of one-to-one transaction ns between a buyer and seller. In a addition, a p person can buy or sell bitcoin n through an n online exch hange, such as the exch hange operate ed by MtGox on n the mtgox x.com websi ite. In these e exchange transactions s, the buyer and seller create e accounts at t the exchan nge and then fund the acc count with curre ency funds, bitcoin b or bo oth. The use er can then e enter a buy o or sell order onlin ne and the website w will match the b buy or sell o order with o one or more sell or buy ord ders. The b buyer receiv ves an increa ase in bitco oin in his/her acc count and th he seller rec ceives an inc crease in cu urrency in hi is/her account. The T bitcoin exchange receives a fee or com mmission fo or the transaction n. A person can c also obtain and use bitcoin thro ough commercial or merchant transaction ns; that is, a person can n use bitcoin n in certain circumstanc ces to pay for goods and serv vices.

5.

ns in a digita al wallet u using either t e provided as s part Users store bitcoin the software

of the bi itcoin softw ware or a wa allet provide ed by vario ous provider rs. MtGox p provides a w wallet

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feature. A wallet can n be materia alized on a piece p of pap per and bitco oins need no ot be stored d on a computer r. 6. M exch hange allow wed persons with MtGo ox accounts to buy and d sell The MtGox

en an accou bitcoin among a thems selves. In th his regard, a person was s to first ope unt at MtGox x and was assig gned an account numbe er. Once a user u wanted to start buy ying or sellin ng bitcoin o on the mtgox website, w he or she would d need to fu und the acc count with cu urrency, bitc coin, or both h. In addition, the account t holder wou uld be subject to anti-m money laund dering (AM ML) proced dures. e account was w funded, , the accou unt holder w would have a currency y balance in the Once the account, correspondi ing to the amount a of currency c he or she had a right to w withdraw; a and, a bitcoin balance b in the account, , correspond ding to the am mount of bit tcoin he or s she had a rig ght to withdraw w. B. B 7. MtGo oxs Capital l Structure. MtGo ox has app proximately 6.5 billio on ($63.9 million) in n liabilities and

approxim mately 3.84 4 billion ($37.7 million) ) of assets a at present. M MtGox has no secured debt. Approxim mately 12% % of the equ uity in MtG Gox is held by the dev veloper of th he initial M MtGox software, , Jed MacC Caleb, with the remaini ing equity h held by Tib banne Co., Ltd., a Japa anese corporati ion located in n Japan. C. C 8. Busin ness Challen nges. The mtgox.com m website w has been subje ect to numer rous attemp pts by perso ons to

breach it ts security, create denial of servic ce (DOS) situations, or to other rwise hack k the system, and a this has been the ca ase since Mt tGox started d operating t the website in July 2011. In certain ci ircumstances such attem mpts have led to the com mpany shutti ing down th he site for pe eriods at a time. .

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9.

On Fe ebruary 7, 2014, 2 MtGox x halted all bitcoin with hdrawals by y its customers

this was because Mt tGox was th he subject to o a massive theft or disa appearance of bitcoins b being th on behalf f of its cus stomers and itself. Th his theft or disappearan nce is held by MtGox bot y the subject t of an inten nse investig gation which h required M MtGox to de evote most o of its currently resources s. As of th he present ti ime MtGox believes th he theft or d disappearanc ce was cause ed or related to o a flaw in th he software algorithm th hat underlies s bitcoin, and d hacking attacks of o one or more per rsons. On February F 24, 2014, MtGo ox suspende ed all trading g after intern nal investiga ations discovere ed a loss of f 744,408 bitcoins presumably from m this meth hod of theft. caused am mong others s MtGox to become b insolvent and to file the Japa an Proceedin ng. D. D 10. and Corpor MtGo oxs Japan Proceeding P rate Reorga anization un nder the JCRA. In ord der to protec ct the MtGo ox business as a going concern and d retain its v value These e events

while Mt tGox investigates the the eft of the bitc coins under its control a and addresses security de efects in the bit tcoin exchan nge, MtGox filed a petit tion (the Jap apan Petition n) for the co ommenceme ent of the Japan n Proceeding g in the Tok kyo Court pursuant p to A Article 17(1 1) of the Jap panese Corp porate Reorgani ization Act (Kaisha Kos sei Ho) (the e JCRA) o on February 28, 2014, r reporting tha at the company y had lost almost 750,0 000 of its cu ustomers bi itcoins, and d around 100 0,000 of its own bitcoins, totaling around 7% of all a bitcoins in n the world, , and worth a around $473 3 million nea ar the time of th he filing. The T Japan Pe etition is atta ached as Exh hibit A to th he accompan nying Declar ration of Robert Marie Mar rk Karpeles (the ( Karpel les Declarati ion). 11. The JC CRA is inten nded to be used u for the r rehabilitation and reorga anization of large

corporate e debtors. The Japan Proceeding is a civil rehabilitatio on. The pu urpose of a civil rehabilita ation procee eding is to formulate a rehabilitation plan as consented t to by a requ uisite number of o creditors and confirm med by the co ourt, to appr ropriately co oordinate the e relationshi ips of

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rights be etween creditors and the e debtor, wit th the aim o of ensuring r rehabilitation of the deb btors business or economic c life. 12. In add dition to the petition for commencem ment, MtGox x also filed a applications for a

temporar ry restraining g order and for a compr rehensive pr rohibition or rder, and for r the appoint tment of a supe ervisor and examiner. By separate e orders date ed February y 28, 2014, the Tokyo C Court granted these t additio onal applicati ions (collect tively, the T Tokyo Court t Orders). T The Tokyo C Court Orders are a attached d, together with their English tran nslation, as s Exhibits B B, C, D, an nd E respectiv vely, to the Karpeles K Dec claration. 13. The Tokyo T Court t appointed Mr. M Nobuak ki Kobayashi as MtGox s superviso or and

examiner r. Under th he Tokyo Co ourt Orders, the Debtor r cannot exe ecute an agr reement with h any third par rty without the t consent of the super rvisor and e examiner. T The Debtor h however rem mains free to in nitiate or pu ursue any leg gal proceedi ing provided d that the co osts of these e proceeding gs be approved d by the supervisor and examiner. On O March 1 0, 2014, Mr r. Kobayashi, pursuant t to the powers conferred c upon by the To okyo Court Orders, issu ued a consen nt allowing th he Debtor to o hire Baker &M McKenzie to o file this case and furthe er acknowle edging that th he consent w was granted a at the condition n that the MtGoxs M sole e Director and a Chief Ex xecutive Off fficer, Mr. K Karpeles, file e this Chapter 15 case as the foreign n representa ative of MtG Gox. A tru ue and corr rect copy o of the

on for consent and the consent iss sued by Mr. . Kobayashi i is attached d to the Kar rpeles applicatio Declarati ion, together r with an Eng glish transla ation, as Exh hibit F. 14 4. The schedule of o MtGoxs s reorganiza ation proce eedings has s not yet been

determin ned. Upon is ssuance of th he commenc cement orde er, the Tokyo o Court will set a deadli ine to file proof f of claims, submit a reh habilitation plan, p etc. A As additional l steps are ta aken in the J Japan Proceedin ng, this Cou urt will be ad dvised.

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15.

maximize re This Chapter C 15 case is bein ng filed in a an effort to m ecoveries to o, and

provide for an equit table distribution of val lue among, all creditor rs. The enjo oining of ce ertain o which Mt tGox and/or r its affiliat tes are part ties in conju unction with h the ongoing litigation to n Proceeding g is essential l to this effor rt. Please ref fer to the Ga amlen protections afforded by the Japan Declarati ion, which is s incorporate ed and made e a part of thi is Petition as if restated herein, rega arding the pendi ing litigation n against MtGox and/or its affiliates. . 16. There are no oth her foreign proceedings p that have b been filed b by, regardin ng, or

against MtGox M and which w are pen nding. E. E 17. MtGo oxs US Liti igation Matt ters. MtGo ox has been named as a defendant in two pen nding lawsui its in the U United

States: CoinLab, C Inc c. v. Mt. Gox x KK1 and Tibanne T KK K, No. 2:13-c cv-0777 (W.D. Wash. M May 2, 2013) (th he CoinLab b Action) and a Gregory y Greene v. MtGox Inc., Mt. Gox K KK, Tibanne e KK and Mark k Karpeles, No. 1:14-cv v-01437 (N. .D. Ill. Febr ruary 27, 20 014) (the C Class Action and with the CoinLab Ac ction, the U US Litigation n Matters). 18. Karpe eles is MtG Gox and Tib bannes CE EO and sole e director. MtGox In nc., a

Delaware e Corporatio on, is a subs sidiary of an nother MtGo ox subsidiary y, and has n neither opera ations or assets. Tibanne, as a described d above, is MtGoxs M pare ent. The ex xchange com mplained of i in the Class Ac ction is opera ated by MtG Gox in Japan. . 1. 19. The CoinL Lab Action. .

The CoinLab C Action was filed in the Uni ited States D District Cour rt for the We estern

District of o Washingto on by CoinL Lab, Inc. (C CoinLab). T The claims a asserted by C CoinLab aris se out of that ce ertain Exclus sive License e Agreement for the USA A & Canada (the CoinL Lab Agreeme ent),

MtGox is s sometimes referred to as Mt t. Gox KK.

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dated No ovember 22, 2012 and entered e into between Co oinLab on th he one hand, and MtGox x and its paren nt corporation, Tibanne, Co. Ltd., a/ /k/a Tibanne e KK, on th he other. Un nder the Coi inLab Agreeme ent, CoinLab b was gran nted a licens se to use M MtGoxs tec chnology to o provide bi itcoin exchange e services fo or customers s in the US and Canad da. As part of the Coin nLab Agreem ment, CoinLab agreed to op perate the se ervices in com mpliance wi ith all applic cable laws. 20. The facts f disclos sed in the CoinLab A Action demo onstrate tha at: prior to final

implemen ntation of th he CoinLab Agreement, it was dete ermined tha at CoinLab w was not pro operly registered d or licensed d to perform m the services called for u under the CoinLab Agre eement; and d, as a result of f such nonp performance by CoinLa ab, MtGox ceased its o own perform mance unde er the CoinLab Agreement, , which was never fully implemented i d to begin w with. 21. CoinL Lab is suing MtGox and a Tibann e for alleg ged breach of the Coi inLab

Agreeme ent and brea ach of the im mplied duty of good fai ith and fair dealing. Co oinLab is see eking damages of $75,000, ,000, which includes $5 50,000,000 a arising from a liquidated d damages c clause C Agr reement, as well as ac ccounting an nd restitutio on. In addit tion, MtGox x has in the CoinLab asserted a countercla aim against CoinLab seeking to rec cover $5.2 m million relati ing to CoinL Labs on of custom mer funds. conversio 22. There is significa ant discovery y yet to be c completed in n the CoinLa ab Action, w which

would re equire MtGo ox to incur substantial s expenses e and d expend sig gnificant res sources. Am mong other thin ngs: (a) CoinLab has h noticed the deposit tion of Karp peles for M March 25 and d 26, 2014 in Taiwan. Karpeles K is the Petitio oner and p proposed fo oreign representa ative in this Chapter C 15 p proceeding, t the Debtors Chief Exec cutive Officer, an nd sole dire ector of the Debtor, and d the individ dual that is most

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knowledge eable about t the techno ological de efects that h have led to o the Debtors current c finan ncial problem ms. (b) MtGox ne eeds to take e several dep positions to complete p preparation o of its defenses, including th he deposition ns of CoinL Labs former r Chief Fina ancial Officer, CoinLabs C former f busi ness develo opment man nager, and third parties wit th knowledg ge of CoinLa abs lack of r regulatory co ompliance a and/or CoinLabs s conversion n of the custo omer funds. (c) (d) Summary judgment j motions m will l likely be file ed in the nex xt few month hs. CoinLab has h served a discovery r request, a res sponse to w which is due on or about March 17, 201 14, which s seeks, amon ng other thi ings, produc ctions and/or insp pection of MtGoxs M enti ire customer r database, a request tha at will result in substantial motion m practi ice. Expert disclosures are due Ap pril 7, 2014, which requires the t preparat tion of exper rt reports an nd will lead t to the deposition ns of such ex xperts. (e) CoinLab may m also see ek to depose e other witne esses before the June 6, 2014 discovery cutoff in the e CoinLab A Action. 23. Relev vant litigatio on schedulin ng dates in n the CoinL Lab Action are as follows:

(i) April 7, 2014, as the deadline e to disclose e expert witn nesses and s submission o of expert wi itness reports; (ii) ( May 2, 2014, as the e deadline to o serve writ tten discover ry; (iii) June 6, 2014, a as the deadline to complete e discovery; (iv) July 7, 2014, 2 as the deadline to file disposit tive motions s; and ember 3, 2014, the date of o trial. (v) Nove 24 4. If the CoinLab Action A is not t stayed in i its entirety, MtGox will l need to ex xpend

substanti ial monetary y and person nnel resourc ces to prepa are expert reports, prep pare respons ses to

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discovery y requests, and a prepare for depositio ons. Given the approaching deadlin nes in this ac ction, all of this s must be do one now if th here is no pro ovisional sta ay, even thou ugh an autom matic stay w will be in place upon u recogn nition of the Japan J Procee eding. F. F 25. The Greene G v. MtGox M Class Action. On or r about Febru uary 28, 201 14, newspap pers and post tings on the Internet rep ported

that a pu urported clas ss action had d been filed in the Unite ed States Di istrict Court for the Nor rthern District of o Illinois ag gainst MtGo ox by an ind dividual nam med Gregory y Greene. 26. On March M 5, 2014 4, counsel to o MtGox rec ceived an em mail from an n attorney named

Steven Woodrow; W a copy of th hat email (w without all a attachments) ) is attached d to the Ga amlen Declarati ion as Exhib bit A. As ca an be seen from f that em mail, Mr. W Woodrow sta ated, among other things, th hat: (a) His law w firm repre esents Grego ory Greene i in the litigati ion recently y filed in the No orthern Dist trict of Illin nois against t Mt. Gox . and tha at he understood d that Bake er &McKen nzie represe ents Mt. Go ox in a sep parate matter pen nding in the Western Di istrict of Washington, wh hich I understood to refer to the CoinLab b Action. (b) h filed a motion m for te emporary re estraining order (TRO ) and His firm had preliminar ry injunctio on and wan nted to kno ow if our firm woul ld be representin ng Mt. Gox x in the mat tter. 27. Mr. Woodrow W at ttached seve eral papers t that his firm m had filed in the Nor rthern

District of o Illinois ac ction. Certai in of those papers p are att tached heret to as discuss sed below. T Those papers demonstrate d the t followin ng: (a) On Februa ary 27, 2014 4, Mr. Wood drows firm f filed a purpo orted class a action in the United Stated District Cou urt for the N Northern Di istrict of Illi inois, -9770349-v1\D DALDMS

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entitled Gregory Greene v. MtGox Inc., et al., Case No. 1:14-cv-1437 (N.D. Ill. Feb. 27, 2014) (the Greene Class Action and with the CoinLab Action, the US Litigation Matters). A copy of the complaint is attached to the Gamlen Declaration as Exhibit B. In the Greene Class Action, the lead plaintiff seeks to represent two classes: (i) all persons in the US who paid a fee to MtGox to buy, sell, or otherwise trade bitcoin; and (ii) all persons in the US who had Bitcoins or currency stored with MtGox as of February 7, 2014, when MtGox halted all withdrawals of currency or Bitcoins. (b) Four defendants are named in the Greene Class Action: (i) MtGox;

(ii) MtGox, Inc.; (iii) Tibanne; and (iv) Karpeles. MtGox Inc. is a second tier subsidiary of MtGox. It was formed in June 2013. It has never conducted any business operations. The company was formed to, among other things, operate certain US operations, including forming banking relationships and obtain appropriate licenses in the US in light of CoinLabs failure to be so licensed. In June 2013, it registered with FinCEN as a money transmitter business. It has been in the process of seeking to obtain state money transmitter business licenses. Tibanne is the parent of MtGox and owns 88% of the shares of MtGox. (c) The complaint asserts twelve causes of action against MtGox, MtGox, Inc., Tibanne, and Karpeles, including consumer fraud, fraudulent inducement, negligence, breach of fiduciary duty, breach of contract, unjust enrichment, trespass to chattels, conversion, for which the lead

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plaintiff is i seeking a tempora ary restraini ing order and prelim minary injunction, a permane ent injunctio on, an accounting, and imposition of a ve trust. constructiv (d) On March h 4, 2014, Mr. M Woodrow ws firm file ed a motion n for a temp porary restraining g order and preliminary p injunction (TRO), of copy of whi ich is attached to t the Gamlen Declara ation as Exh hibit C. T The TRO m motion

requests th hat the court t: (i) freeze any of the defendants assets in th he US (including g any servers s or other com ipment in the e US upon w which mputer equi customer information regarding b bitcoins or c currency acc counts is sto ored); (ii) prohib bit the defe endants from m transferrin ng any bitc coin or curr rency belonging to the class s members; (iii) provide e an accoun nting of all o of the s outstandin ng liabilitie es; and (iv) impose a c constructive trust defendants over the defendants d assets a for the e exclusive b benefit of th he class mem mbers and the de efendants to hold such a assets in trus st for the cla ass members and immediate ely transfer those t assets to the class members. A hearing o on the motion is scheduled s fo or March 11, , 2014. (e) In addition n, in the mo otion referred d to above p plaintiff is seeking expe edited discovery. 28. The claims asserted against MtGox M in the e Greene Cl lass Action i indicate that t such

claims ar rise out of the same fa acts which led l to MtGo oxs insolve ency and filing of the J Japan Proceedin ngthe theft of MtGox x customers bitcoin and d MtGoxs c consequent i inability to r return such bitc coin to its cu ustomers. If the Green ne Class Act tion is not s stayed in its entirety, M MtGox

will nee ed to expen nd substant tial monetar ry and per rsonnel reso ources to d defend both h the

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TRO/preliminary injunction motion (including its request for expedited discovery) as well as to defend the litigation on the merits. Among other things: (a) The request for expedited discovery, if granted, will require MtGox to divert substantial personnel resources to comply, as well as substantial attorney fees at the same time MtGox is trying to devote its resources to assisting in the Japanese Proceeding. (b) (c) Preliminary injunction papers will have to be prepared. Once defendants are served, responses to the complaint will have to be prepared. The issues involved in the Greene Class Action have only occurred recently, may not yet be fully understood, even by MtGox, and are of a highly technical nature. A fair understanding of them will have to gained in order to meaningfully respond to the complaint. require substantial resources and attorney fees. (d) Potentially complex and technical class certification issues will be litigated. Among other things, the claims are based on Illinois state law and involve issues of individual reliance. (e) Depositions will likely have to be taken of one or more MtGox personnel in order to understand cause and extent of the bitcoin loss. Yet, these are the same issues that are already being investigated in the Japan Proceeding. (f) Experts may well have to be retained. That will

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AR RGUMENT II. RECOGNIT R TION OF MTGOXS M FOREIGN R REPRESEN NTATIVE A AND FORE EIGN MAIN M PROC CEEDING ARE A APPR ROPRIATE E. A. A 29. Mr. Karpeles K Ma ay Be Recog gnized as M MtGoxs For reign Repres sentative. The te erm foreign n representat tive is defin ned in sectio on 101(24) o of the Bankru uptcy

Code as follows: f The T term for reign representative me eans a perso on or body, i including a person or body appointed on an interim bas sis, authoriz zed in a fo oreign proce eeding to ad dminister the reorganiza ation or the liquidation l o of the debtor rs assets or affairs or to o act as a rep presentative of such foreign proceedi ing. 11 USC. 101(24). 30. As set s forth in n the Karp peles Decl aration, the e Tokyo C Court appo ointed On

Mr. Nobu uaski Kobay yashi, a Jap panese attor rney, as M MtGoxs supervisor and d examiner.

March 9, , 2014, Mr. Kobayashi, pursuant to o the genera al powers co onferred upo on him unde er the JCRA an nd by order of o the Tokyo o Court, issu ued a consen nt empowerin ng MtGoxs sole directo or and Chief Ex xecutive Offi ficer, Mr. Ka arpeles, to fi ile this Chap pter 15 case as the foreign represent tative of MtGo ox. A true and a correct copy of the e application n for consen nt and the consent issue ed by Mr. Koba ayashi is att tached, toge ether with an n English tr ranslation, a as Exhibit F to the Kar rpeles Declarati ion. Mr. Kar rpeles thus qualifies q as a foreign repr resentative u under section n 101(24). B. B 31. The Japan J Proce eeding is a Foreign F Pro ceeding. The Bankruptcy B Code C defines a foreign n proceeding g as a coll lective judicial or

administr rative proce eeding in a foreign coun ntry, includi ing an inter rim proceeding, under a law relating to t insolvenc cy or adjustm ment of deb bt in which proceeding the assets a and affairs o of the

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debtor ar re subject to control or supervision s by b a foreign n court, for t the purpose of reorganiz zation or liquida ation. 11 USC. U 101(2 23).2 32. In In re r Betcorp Ltd., L 400 B.R R. 266 (Bank kr. D. Nev. 2009), the B Bankruptcy C Court

for the District D of Nevada N anal lyzed wheth her an Austr ralian volun ntary windin ng up procee eding could be recognized as a foreign n proceeding g under Chap pter 15. The e court noted d that Chapt ter 15 incorpor rate[s] the Model M Law on o Cross-Bo order Insolve ency, and t to interpret t the term fo oreign proceedin ng, the court shall consider c its internationa al origin, an nd the need d to promot te an applicatio on of this ch hapter that is i consistent t with the ap pplication of similar sta atutes adopte ed by foreign ju urisdictions. Id. at 275-76 (quoting g section 150 08). To T fall within n the scope of o the Model l Law, a fore eign insolven ncy proceed ding needs to o possess ce ertain attribu utes. These include the e following: basis in in nsolvencyre elated law of the origina ating State; involvement i t of creditors s collectively; control or r supervision n of the asse ets and affairs of the deb btor by a cou urt or anothe er official body; and re eorganization or liquidation of the e debtor as s the purpos se of the pr roceeding. . . . Id. at 27 76 (quoting g UNCITRA AL Model Law L on Cro oss-Border Insolvency With Guid de To Enactmen nt, 32, at 10). 1 33. The court c then co onducted a le engthy exam mination of t the Australia an winding up to

determin ne whether it t met the req quirements, namely n whe ether it was: (i) a proce eeding; (ii) th hat is either jud dicial or adm ministrative; (iii) that is collective in n nature; (iv) ) that is in a foreign cou untry; (v) that is authorized d or conducted under a law l related t to insolvency y or the adju ustment of d debts;

Th he current defi finition of fore eign proceedin ng in the Bank kruptcy Code m makes clear th he concept exp pressed in In re Netia N Holdings, , S.A., 277 B. .R. 571 (Bank kr. S.D.N.Y. 2 002), a case u under section 304, that an in nterim proceeding g qualifies as a foreign pro oceeding. Se ee id. at 580 (finding that the filing of f an applicatio on for commence ement started a continuous pr rocess that plai inly satisfied e each of the requ uirements nece essary to qualif fy as a foreign pr roceeding); se ee also In re Compania C Mexicana de Aviac cion, S.A., Cha apter 15 Case No. 10-14182 (MG) (Bankr. S.D.N.Y. Aug. 16, 1 2010) (boa ard of director rs of foreign company can appoint foreig gn representati ive on roceeding beca ause under Me exican law man nagement rem mains in contro ol until interim basis to initiate Chapter 15 pr Mexican Court C replaces it). Indeed, cou urts have recog gnized proceed dings under the JCRA as a f foreign proceed ding at the same procedural p stag ge as the Japan n Proceeding. See In re Elpi ida Memory, In nc., No. 12-10 0947 (Bankr. D D. Del. Apr. 24, 20 012).

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(vi) in which the deb btors assets and affairs are subject t to the contro ol or supervi ision of a fo oreign court; an nd (vii) which h proceeding g is for the purpose p of re eorganizatio on or liquida ation. Id. at t 277. The cour rt concluded that all relev vant criteria were met an nd recognize ed the Austra alian proceeding. 34 4. MtGo oxs Japan Proceeding P meets m all of the criteria set forth in n section 101(23)

and the aforementioned cases, and a is entitl led to recog gnition as a foreign pr roceeding u under Chapter 15. 35. First, the Japan Proceeding P is a proceed ding, as it w was initiated d by the filin ng of

the petition to commence reorgan nization proc ceedings. 36. Secon nd, the Japan n Proceeding g is judicia al, as the T Tokyo Court has exercise ed its

superviso ory powers by b granting MtGoxs pe etitions for a comprehen nsive prohib bition order, for a temporar ry restraining g order, and for the appo ointment of a supervisor and examin ner. 37. Third d, the Japan Proceeding P is i collective e in nature because all a affected cred ditors

are invol lved. The Be etcorp court found that a proceedin ng was collec ctive where it consider rs the rights an nd obligation ns of all cre editors in contrast c to a receiversh hip remedy instigated a at the request, and a for the benefit, b of a single secu ured creditor r. 400 B.R R. at 281; see e also In re ABC Learning g Centres Lt td., 445 B.R R. 318, 328 (Bankr. D. . Del. 2010 0) (citing In re Betcorp p Ltd. regarding g the meanin ng of collec ctive in natur re). 38. 39. Fourt th, the Japan n Proceeding g is pending in Japan, a f foreign coun ntry. Fifth, the Japan Proceeding g is govern ned by the JCRA, whi ich was ini itially

modeled on Chapter X of the Un nited States Bankruptcy B A Act of 1898 and was am mended in 20 002 to ditious proce edure. The JCRA J is inten used for the r rehabilitation n and facilitate more exped nded to be u reorganiz zation of larg ge corporate e debtors.

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40.

Sixth, MtGoxs assets are subject to t the court-ap ppointed su upervision o of the

superviso or and exam miner, who has confer rred his aut thority to M Mr. Karpeles s to continu ue to represent t MtGox unt til a trustee is appointed. 41. 42. Seven nth, the objec ctive of the Japan J Procee eding is reha abilitation of f the Debtor r. As all l of the crite eria required d by section 101(23) are e satisfied, t this Court sh hould

recognize e the Japan Proceeding as a forei ign proceedi ing as requ uired by sec ction 1517 o of the Bankrupt tcy Code. C. C 43. The Japan J Proce eeding is a Foreign F Mai in Proceedin ng. The Ja apan Procee eding is also a main pr roceeding. A foreign m main proceed ding

is defined d as a forei ign proceedin ng pending g in the coun ntry where th he debtor ha as the center of its main inte erests. See 11 USC. 1502(4). Section S 1516 6(c) provides a presump ption that, i in the absence of o evidence to the contra ary, the debt tors register is presumed d to be the c center red office of the de ebtors main n interests. 11 USC. 1516(c); s see also In re Bear Ste earns High-G Grade Structure ed Credit Str rategies Mas ster Fund, 37 74 B.R. 122 2, 127 (Bank kr. S.D.N.Y. 2007), affd d 389 B.R. 325 (S.D.N.Y. 2008); 2 In re Tradex Swis ss AG, 384 B B.R. 34, 43 (Bankr. D. M Mass. 2008). . 44 4. The phrase p cent ter of main n interest ( (COMI) i is a term o of art, which h the

Bankrupt tcy Code do oes not defin ne explicitly y. Courts ha ave generall ly equated C COMI to wh here a debtor ha as its princip pal place of business. See S In re Be ar Stearns H High-Grade S Structured C Credit Strategies Master Fu und, 389 B.R R. 325, 336 (S.D.N.Y. ( 2 2008) (noting g that [a]n early bankru uptcy court dec cision that addressed a the determina ation of COM MI specifica ally discusse es the [regul lation adopting the EU Con nvention on Insolvency Proceedings P s] language a and properly y equates it t to the United States S conce ept of princi ipal place of f business (citing In re e Tri-Contin nental Exch. Ltd., 349 B.R. 627, 629 (Bankr. E.D D. Cal. 2006 6)). The Bankruptcy C Code provid des that [i]n n the absence of evidence to the contrary, the deb btors regist tered office, , or habitual l residence i in the -16770349-v1\D DALDMS

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case of an a individua al, is presum med to be the e center of t the debtors s main intere ests. 11 U U.S.C. 1516(c). This pre esumption may m only be overcome b by evidence e that the de ebtors regis stered n its COM MI. office is not 45. In La avie v. Ran (In re Ran) ), 607 F.3d 1017 (5th C Cir. 2010), the Fifth C Circuit

identified d several factors f relev vant to the e COMI an nalysis: the location of the deb btors headquar rters; the loc cation of tho ose who actu ually manage e the debtor r; the locatio on of the deb btors primary assets; the location of the majority y of the deb btors creditors or of a majority o of the d be affected d by the case e; and/or the e jurisdiction n whose law w would app ply to creditors who would putes. (citi ing In re Sph hinX, 351 B.R. 103 (Ban nkr. S.D.N.Y Y. 2006)); se ee also In re Bear most disp Stearns, 374 3 B.R. at 129; In re Tr radex, 384 B.R. B at 43 ( Such factors s as the loca ation of a deb btors headquar rters; the loc cation of a debtors management; the e location of f its assets a and creditors s; and the site of o the contro olling law are a importan nt in determi mining COMI I.); In re B Betcorp Ltd., 400 B.R. at 287-88 (ref ferring to Bear B Stearns s and Trade ex and also o to cases in the Euro opean nity for COM MI analysis). Commun 46. MtGo oxs COMI is clearly Japan J under r all of the e relevant c criteria. MtG Goxs

registered d office is located l in Tokyo, T Japan n. Most of MtGoxs pe ersonnel, including its C Chief Executiv ve Officer an nd sole dire ector, reside in Japan. Thus, becau use the Japa an Proceedi ing is pending in MtGoxs COMI, it qu ualifies for recognition r a as a foreign main procee eding pursua ant to section 1517 of the Bankruptcy B Code. C D. D 47. The Petitioner P is Entitled to Relief Purs suant to Sec ction 1517. Sectio on 1517 sta ates that an order recog gnizing a fo foreign proceeding sha all be

entered if all of the requirement ts for recogn nition have b been met. S See 11 USC. 1517. If all of r recognitio on are satisf fied, recogn nition under section 1517(a) and ( (b) is the requirements for ry, unless gr ranting recog gnition woul ld be fundam mentally agai inst public p policy pursua ant to mandator -17770349-v1\D DALDMS

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section 1506 1 of the Bankruptcy y Code. See e H.R. Rep. 109-31, pt. . 1 (2005) ( (The decision to grant recognition is not n dependen nt upon any findings abo out the natu ure of the for reign proceedings . . . [t]he requirement ts of this sec ction . . . are all that mus st be fulfilled d to attain re ecognition.); see also In re e Ran, 607 F.3d F at 1022 2 ([t]his sta atutory mand date is subje ect to a narr row public p policy exception n which perm mits a court to refuse rec cognition if f the action w would be ma anifestly con ntrary to the pu ublic policy of o the United d States. 11 1 U.S.C. 1 506. But, th he exception is intended to be invoked only o under exceptional e circumstance c es concernin ng matters of f fundament tal importanc ce for the Unite ed States.). 48. The JC CRA was modeled m after r Chapter IX X of the U.S. Bankruptcy y Act of 1898 and

shares many m of the core c objectiv ves of the Bankruptcy B C Code. Cour rts have rout tinely recognized the foreig gn main pro oceedings commenced un nder the JCR RA are not m manifestly a against US p public policy. See, e.g., In I re Elpida a Memory, Inc., I No. 12 2-10947 (Ba ankr. D. Del l. Apr. 24, 2 2012) (granting g recognition n of foreign main m procee eding where company so ought reorga anization in J Japan under JC CRA); In re Spansion Lt td., No. 09-1 11480 (Bank kr. D. Del. M May 28, 200 09) (same); In re Japan Ai irlines Corp p., No. 10-10198 (Ban nkr. S.D.N.Y Y. Feb. 17, , 2010) (sam me). The J Japan Proceedin ng satisfies all of the re equirements to be design nated as a fo foreign main n proceeding g, and recogniti ion should th herefore be granted. g III. THE T ISSUANCE OF PR ROVISION NAL RELIE EF INCLUD DING IMPO OSITION O OF AUTOMATI A IC STAY TO T PROTEC CT MTGOX X IS APPRO OPRIATE. 49. As set t forth above e, it is likely y that MtGox x will be suc ccessful in obtaining an order

under se ection 1517 recognizing Mr. Karp peles as its s foreign re epresentative e and the J Japan Proceedin ng as a forei ign main pro oceeding. Se ection 1519( (a) provides, , in pertinent t part: From the tim me of filing a petition for recognit tion until th he court rule es on the c may, at a the reques st of the fore eign represen ntative wher re relief is petition, the court ur rgently need ded to protect the asse ets of the d debtor or in n the interes sts of the cr reditors, gran nt relief of a provisional l nature, incl luding -18770349-v1\D DALDMS

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(1 1) staying ex xecution aga ainst the debt tors assets; (2 2) entrusting g the administration or realization of f all or part of the debto ors assets lo ocated in th he united states to the e foreign re epresentative or anothe er person au uthorized by y the court, including an n examiner, in order to protect and d preserve ause of othe th he value of assets that, by their na ature or beca er circumsta ances, are perishable, su ubject to dev valuation or otherwise o in n jeopardy . . . 50. The standards app plicable to an a injunction n apply to th he relief to b be granted u under

section 1519(a). 1 Se ee 11 USC. 1519(e). After reco ognition, Mt tGox will b be entitled to the protection of the aut tomatic stay y of section 362 pursuan nt to section n 1521(a)(1) ). It is ther refore appropria ate to issue provisional automatic stay s relief p pending the issuance of f the Recogn nition Order, to o ensure tha at MtGox, it ts United Sta ates assets, and the Jap pan Proceedi ing are prot tected pending issuance i of that t stay. 51. Sectio on 1519(a) of o the Bank kruptcy Cod de expressly y permits th he Court to grant

relief of f a provision nal nature from f the tim me of a petiti on for recog gnition until the time tha at the court rul les on that petition, p whe ere such rel lief is urge ently needed d to protect the assets o of the debtor or r the interes st of the cre editors. 11 USC. 15 19(a). Addi itionally, pu ursuant to se ection 105(a), th his Court ha as broad auth hority to issue any orde er . . . that is necessary or appropria ate to carry out t the provisio ons of [the Bankruptcy B Code]. C 11 U USC. 105( (a). 52. In ord der to receiv ve automatic c relief on a provisiona al basis pursuant to sec ctions

105(a) an nd 1519(a) of o the Bankr ruptcy Code, , a debtor mu ust comply w with the stan ndards gove erning the issuance of a pre eliminary injunction. Se ee, e.g., In re e Vitro, 455 B.R. 571 (B Bankr. N.D. Tex. 2011) (c citing In re Commonwe ealth Oil Re efining Co., , 805 F.2d 1175, 1188 (5th Cir. 1 1986) (injunct tions issued under 105 5 outside of a plan of reo organization n may be gra anted only u under the usual l rules for the t issuance e of an injun nction.)); I In re Ho Se eok Lee, 34 48 B.R. 799, 802 (Bankr. W.D. W Wash. . 2006) (not ting that sec ction 1519 a authorizes di iscretionary relief durin ng the

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period be etween petiti ion filing to petition recognition); se ee also In re Wellpoint S Sys. Inc., No o. 1110423 (B Bankr. D. Del. D Feb. 11, 1 2011) (applying pr reliminary i injunction r requirements s and granting provisional relief to de ebtor pursuant to section ns 105 and 1519); In re e Crystallex x Intl Corp., No. N 11-14074 4 (Bankr. D. Del. Dec. 28, 2 2011) (sa ame); In re G Grant Forrest t Prods. Inc., , No. 10-11132 2 (Bankr. D. . Del. Apr. 19, 1 2010) (sa ame). For th he reasons set forth abov ve, Petitione er has established that he is likely to succeed on his s petition to have the Jap pan Proceedi ing recogniz zed as a foreign n main proce eeding and himself h recog gnized as for reign representative. Fu urther, as set forth below, MtGox M will suffer irrepar rable harm is s such relief f is not grante ed and all eq quities and p public policy we eigh in favor r of the gran nting of such h relief. A. A 53. MtGo ox Satisfies All A Require ements for I Injunctive R Relief. MtGo ox has comp plied with al ll of the req quirements f for an injunc ction, and sh hould

therefore e be afforded d provisiona al relief, incl luding in the e form of an n automatic s stay as to th he US Litigation n Matters. Generally, in deciding whether to grant an in njunction, co ourts in the Fifth Circuit consider c fou ur factors: (i i) whether the t movant has shown a reasonab ble probabili ity of success on o the merits s; (ii) wheth her the mova ant will be ir rreparably in njured by de enial of the r relief; (iii) whet ther granting g preliminar ry relief will result in ev ven greater h harm to the n nonmoving p party; and (iv) whether gra anting the pr reliminary relief r will be e in the pub blic interest. In re Vitro, 455 B.R. at 580 5 (citing Winter W v. Na atural Resou urces Defens se Council, Inc., 555 U U.S. 7 (2008) ); see also In re e Commonw wealth Oil., 805 8 F.2d at 1188. 1. 54 4. Likelihood of Success s on the Me erits.

Becau use it is lik kely that Mt tGoxs Japa an Proceedin ng will be recognized as a

foreign main m proceed ding, at whic ch point the section 362 automatic st tect its US a assets, tay will prot success on o the merit ts has been demonstrate ed. See, e.g g., In re MM MG LLC, 25 56 B.R. 544, 552

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(Bankr. S.D.N.Y. S 20 000) (likeliho ood of succe ess on merit ts was demo onstrated wh here it was l likely that cour rt would gran nt comity to debtors for reign insolve ency proceed ding). 2. 55. ble Harm. Irreparab

MtGo ox will face immediate i and a irreparab ble harm if t the US Litig gation Matter rs are

not staye ed. If the CoinLab C Mat tter is allowe ed to procee ed in any respect, MtGo ox personnel will need to spend s substa antial time preparing p fo or and attend ding deposit tions, prepar ring respons ses to discovery y requests, and a working g with couns sel and expe erts to draft expert repo orts. See Ne evada Power Co o. v. Calpine e Corp. (In re r Calpine Corp.), C 365 B B.R. 401, 410 0 (S.D.N.Y. 2007) (enjo oining creditor from f litigatin ng against Chapter C 11 debtors d guar rantor becau use debtor would be forc ced to aid guara antors defen nse, causing g significan nt burden an nd distraction n of key em mployees fro om its restructur ring efforts ); In re R&G G Fin. Corp p., 441 B.R. at 411 (Ban nkr. D.P.R. 2 2010) (irrepa arable harm fou und where [ [d]ebtor wou uld be the en ntity legally and financi ially respons sible in prov viding not only all the legal l costs of [su ubsidiarys] defense d . . . but also its limited man nagerial reso ources would al lso be divert ted in assisti ing towards the prepara ation for suc ch proceedin ngs); In re J Japan Airlines Corp., No. 10-10198 (B Bankr. S.D.N N.Y. Jan. 28 8, 2010) (irr reparable ha arm shown w where Chapter 15 debtors US assets could c be sub bject to cred ditors effort ts to control l or possess such assets). 56. ort, MtGoxs s discovery preparation must begin n now in the e CoinLab M Matter In sho

and must t defend a TRO motion on March 11, 2014 in th he Class Act tion if there is no provis sional stay, even though the e automatic stay s will be in place upo on recognitio on of the Jap pan Proceedi ing in s will further r distract for r the reorgan nization effor rt and result t in a diversi ion of the near future. This resources s that other rwise could d be availab ble for the benefit of all creditor rs. It has been

consisten ntly held tha at the prem mature piecin ng out of pr roperty involved in a fo oreign liquid dation proceedin ng constitute es irreparabl le injury. In n re Lines, 81 B.R. 267, 270 (Bankr. . S.D.N.Y. 1988). -21770349-v1\D DALDMS

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It has als so been held d that harm to an estate exists e where e the orderly y determinati ion of claim ms and the fair distribution d of o assets are e disrupted. See S Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d d 709, 714 (2d ( Cir. 198 87). Finally y, irreparabl e harm has been found d where allo owing litigation n to go forw ward would (i) ( threaten the assets o of a foreign estate, (ii) subject a fo oreign represent tative to a default jud dgment, and d/or (iii) div vert funds needed for the purpos se of maximizing value fo or the estate es creditors s. In re Ger rcke, 122 B. .R. 621, 626 6 (Bankr. D D.D.C 1991). 57. Under r the Tokyo Court Orde ers, the stay that is in pl lace in the J Japan Procee eding

extends to all asset ts wherever located, in ncluding ass sets located d in the Un nited States. The Petitioner is requesti ing this Cou urts assistan nce to stay a any action or r proceeding gs by credito ors in the Unite ed States, so o that the reo organization n goals that a are intrinsic of the Japan n Proceeding g can be fulfille ed. 58. MtGo oxs success sful rehabili itation requ uires that th he claims of all cred ditors,

wherever r situated, be b resolved as a part of th he foreign p proceeding. Allowing th he US Litig gation Matters to t go forwar rd thus preju udices other r creditors of f MtGox, w whose claims s will be hea ard in the Japan n Proceedin ng. Given MtGoxs current c liqui idity concern ns, all potential saving gs are

necessary y to MtGox s reorganiza ation effort and a cannot b be diverted t to litigation c costs at this time. MtGox also a requires s the stewar rdship of its key empl oyees in the Japan Pro oceeding. T These employee es, includin ng Karpeles s, cannot be distracted d by attend ding disposi itions, prep paring discovery y, and other rwise overseeing the US S Litigation M Matters. In n short, if the e relief soug ght in the Appli ication is no ot granted, it is likely tha at MtGoxs e estate will be e substantiall ly diminishe ed. 3. 59. Balance of o Hardships s.

e hardships decidedly d fa avors MtGox x, because th he other part ties to The balance of the

the US Litigation L Matters M will suffer s little or no harm as a result of the requ uested stay o of the -22770349-v1\D DALDMS

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proceedin ngs. This Co ourt will sim mply be prov viding the sa ame relief to o MtGox tha at will be granted upon recognition of the Japan Pr roceeding pu ursuant to se ection 1520( (a)(1). As a result, plai intiffs S Litigation Matter will also benefit t from the re equested pro ovisional sta ay because it will in the US also prev vent the was sting of their r resources before b the st tay under se ection 1520( (a)(1) comes s into place. Certainly, C no o creditor or party to the e US Litigat tion Matters will be har rmed if MtG Gox is granted the t full ben nefit of a breathing peri iod to allow w it to focus s on its rest tructuring efforts without the t distractio on that would result if th he US Litigat tion Matters s were to pro oceed. See al lso In re W.R. Grace & Co., 386 B.R R. 17, 33 (Bankr. D. De el. 2008) (w weighing pot tential harms s and finding th hat relative hardship of f the parties favors f the [d d]ebtors). 4. 60. Public Int terest.

Granting the Appl lication is cl learly in the public inter rest because provisional relief USC. See 11 U

requested d by the Petitioner P ad dvances the express pu urpose of C Chapter 15.

1501( (a)(1)(B)-(a)(4). (The purpose of th his chapter is s to . . . prov vide effective e mechanism ms for dealing with w cases of o cross-bord der insolven ncy with the e objectives of coopera ation betwee en the courts an nd other com mpetent auth horities of fo oreign count tries involve ed in cross-b border insolv vency cases . . . [and] prote ection and maximization m n of the valu ue of the deb btors assets. .); see also In re ervs., Inc., 258 2 B.R. 96 6, 108 (Bank kr. D. Del. 2000) (In the context t of a Integrated Health Se bankrupt tcy case, pro omoting a successful s reorganizatio on is one of f the most important p public interests.). 61. Accor rdingly, it is s respectfully y requested that this Co ourt apply th he automatic stay,

on a prov visional basi is, to tempor rarily halt the US Litigat tion Matters to protect M MtGoxs assets in the Unite ed States pen nding recogn nition.

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IV.

THE T PROPO OSED NOT TICE AND HEARING H ON RECOGNITION. 62. Bankr ruptcy Rule 1011(b) pro ovides that a party be pro ovided 21 da ays notice o of the

filing of a Chapter 15 5 petition. Fed. F R. Bank kr. P. 1011(b b). Bankrupt tcy Rule 200 02(q)(1) pro ovides that a par rty is to be given g 21 day ys notice of a hearing to o consider gr ranting the r relief request ted in a Chapter 15 petition n. Fed. R. Bankr. P. 200 02(q)(1). Ba ankruptcy Ru ule 9007 per rmits the Court to e the time, fo orm and man nner in which h notice shal ll be given. Fed. R. Ban nkr. P. 9007. . prescribe 63. Bankr ruptcy Rule 1011(b) also provides t that any par rty objecting g to a petitio on for

recogniti ion under Ch hapter 15 sh hall file such h objection w within 21 da ays of that up pon which n notice is served d. Fed. R. Ba ankr. 1011(b b). The Peti itioner propo oses to serve e notice of th he Petition w within three bus siness days of o the date of f the order granting the A Application. 64 4. As se et forth in the Applica ation, the P Petitioner req quests that the Recogn nition

Hearing be b scheduled d for a date to t be determ mined and ag greed upon b by the Court and Petition ner on or after March M 31, 20 014. This will w provide the t required 21 days no otice and wil ll allow suffi ficient time for objections o to o the Petition n, if any, to be received in advance of the hearin ng. Notice o of the Recognit tion Hearing g, together with w any or rder granting g the Appli ication, will be provide ed to: (i) the De ebtor; (ii) Mr. M Nobuaki Kobayashi, K as a supervisor r and examin ner of MtGo ox; (iii) all parties to the US S Litigation Matters; (iv) ) the Office of the Unite ed States Tru ustee of the Northern Di istrict of Texas; and (v) suc ch other par rties as the Court C may d direct (collec ctively, the Notice Part ties). The Petit tioner proposes to notify y the Notice Parties P by e-mail, facsim mile, and/or e express mail l. 65. Such notice meets s the require ements of Ru ule 2002(q) because it i is provided t to the

required parties with hin the pros scribed time period, and d it is also in keeping with the Co ourts discretio on to set the e particularit ties of notic ce procedure es pursuant to Rule 900 07. In re Pi ierce, 435 F.3d d 891, 892 (8 8th Cir. 2006 6).

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NCLUSION N CON 66. The Petitioner P res spectfully su ubmits that th the Petition s satisfies the requiremen nts for

the recog gnition of Mr. M Karpeles, as MtGoxs s foreign re epresentative e, and for r recognition o of the Japan Proceeding as its foreign n main proce eeding. The e Petitioner further resp pectfully req quests entry of an order pro ovisionally applying a the e automatic stay of secti ion 362 to t the US Litig gation p to sections 105 5(a) and 151 19(a) pendin ng issuance o of the Recognition Orde er, as Matters pursuant well as scheduling s the t Recognit tion Hearing g and appro oving the fo orm and man nner of noti ice to interested d parties. Dated: March 9, 20 014 Dallas, Tex xas Respectfully y submitted, , BAKER & McKENZI IE LLP By: /s/ Da avid W. Par rham Davi id W. Parham m State e Bar No. 15459500 John n Mitchell e Bar No. 24 4056313 State 2300 0 Trammell C Crow Center r 2001 Ross Avenu ue Dalla as, Texas 75 5201 Telep phone: (214) ) 978-3000 Facsi imile: (214) 978-3099 Emai il: david.par rham@bake ermckenzie.c com Emai il: john.mitc chell@baker rmckenzie.com - and dk (pro hac v vice pending) ) Erin E. Broderick Illino ois Bar No. 6 6295974 300 E East Randolp ph Drive, Su uite 5000 Chic ago, Illinois s 60602 Telep phone: (312) ) 861-8000 Facsi imile: (312) 861-2899 Emai il: erin.brod derick@bake ermckenzie.c com Attor rneys for the e Petitioner R Robert Marie Mark k Karpeles, F Foreign Rep presentative of MtGo ox Co., Ltd., , a/k/a MtGo ox KK

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