FRESNO, Calif. (KFSN) -- In the courtroom and out of state, efforts to move the Bitwise bankruptcy case from Delaware to Fresno are blocked, for now, as creditors look to recover some of their money.
This comes nearly three months after the failed Fresno-based company abruptly laid off all of its employees and two months after the defunct company filed for bankruptcy.
On June 28, the company filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of Delaware.
Laid-off employees, creditors, and investors of Bitwise are all looking for their fair share after the company crumbled. For those laid-off employees, they want unpaid wages and 401k contributions and lawsuits detail the millions owed to creditors.
Six creditors from Central California joined together in their effort to get what they were owed. Hiring attorney Scott Cousins out of Delaware to represent them. Between the 6 companies, they're owed $7.75 million. Wednesday morning, they requested the case be moved from Delaware, where the company was incorporated, to Fresno, where the company was headquartered.
"The concern was, there was a lot of fraud and mismanagement that was going on in Fresno. 2 of the former officers, the Co-Ceos, are located in Fresno," said Cousins. "So there were a lot of connections to Fresno. That we didn't believe were the same as in Delaware."
The judge ultimately ruled the argument was not strong enough to move the case. Despite losing that motion, Cousins said he believes there was a victory for his clients in court today.
"We were the ones who were calling to the attention of the trustee here in Delaware some of the fraud that was going on, and of course, my guys put in money at the very end, just as the company was collapsing," said Cousins. "We wanna make sure that... we don't want the former officers and directors of Bitwise to evade accountability."
Bitwise did have a 5 million dollar insurance policy that could be used to cover defense costs for the directors and officers.
Whatever is left over from that $5 million can be paid out to creditors.
The parties are meeting in mediation this week to hopefully shorten the time spent in court to allow more of that money to go to creditors rather than to defense costs.
It was revealed in court Wednesday that representatives for board members, the insurance company, and the FBI recently toured the buildings leased by Bitwise in both Bakersfield and Fresno. The company is allegedly planning to file notices of abandonment for the leases it has in both cities.