Crucial for the Terraform Labs team. FTX, Core Mining, and even Silicon Valley Bank were among the companies that were affected by the famous Chapter 11 of the American bankruptcy law at the time. You have most likely already heard about this infamous chapter. As part of this process, a firm that is experiencing severe financial difficulties continues to operate while simultaneously negotiating a staggered repayment schedule with its creditors. All of this takes place under the supervision of a judge who has the authority to restructure the company or its management, if required.
Terraform Labs, the corporation, was the one that submitted the paperwork to the Delaware bankruptcy court on January 21. The transaction in question was related to this procedure. To refresh your memory, Do Kwon was the sole founder of this company. Not only is it the origin of the Terra token (LUNA), but it is also the origin of the UST stablecoin, both of which practically collapsed in May of 2022. Take a look at the specifics of the procedure that have been known up to this point, as well as the expectations of the new administration at Terraform Labs.
Chapter 11 Terraform Labs: The company filed for bankruptcy
On January 21, Terraform Labs Pte. Ltd. formally submitted a Chapter 11 bankruptcy petition, disclosed in a comprehensive 14-page document. Noteworthy details include a creditor count estimated between 100 and 199, along with key financial indicators. Presently, Terraform Labs holds cash assets ranging from $100 million to $500 million, counterbalanced by a debt within the same bracket. While the positive aspect suggests ample resources for creditor reimbursement, the downside emerges from procedural expenses and potential undisclosed debts, portraying a notably precarious financial situation.
In the document published by the courts, we can also read the statements of the new leader, Chris Amani, who welcomes this procedure which he views positively:
“This step protects our ability to continue working with the community on infrastructure, innovative tools and products, and other ecosystem supports. The Terra community and ecosystem have demonstrated unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving outstanding legal challenges. »
Chris Amani, current CEO of Terraform Labs – Source: Cointelegrah
Terraform Labs has just filed to file for Chapter 11 of the US Bankruptcy Law.
Management still hopeful of rebounding from 2022 slump
But more than simply surviving the procedure, the manager seems to hope to be able to relaunch the project in the future! For this, he trusts his teams and remains resolutely optimistic in his statements:
“We have already overcome significant challenges and, against all odds, the ecosystem has survived and even developed in new ways after depeg; we look forward to the successful resolution of the ongoing legal proceedings. »
Chris Amani, current CEO of Terraform Labs – Source: The Block
Predicting the fate of the Terra (LUNA) project in the coming months or years remains uncertain. The community is reeling from recent weeks of turmoil, transforming Terra from a thriving ecosystem during the last bull market into an apparent industrial disaster, possibly involving international fraud. Adding to the complexity, the project’s former leader, currently serving a four-month prison sentence in Montenegro for using false documents, is yet to face trial for his role in this controversy. He successfully obtained a trial postponement in the United States, where he is slated to face multiple fraud charges and high risks on March 23. Additionally, legal proceedings await him in Korea, his country of origin.