The company that operates Bitcoin Center NYC has filed for Chapter 11 bankruptcy protection after months of legal wrangling.
The World Bitcoin Association (WBA) has been embroiled in a legal dispute with its landlord over site issues at 40 Broad Street, which 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 the company 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. Spanos said that the Bitcoin Center NYC remains open despite the problems.
In an interview, New York attorney Jacques 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 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 as interest and court fees.
The landlord countersued in civil court later that month, seeking to evict the company 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. An eviction notice included in court documents obtained by CoinDesk show that the landlord served an eviction notice dated August 2013, demanding that the tenant vacate the property by the end of September.
Organization evolution
The New York-based WBA was originally intended to serve as an advocacy group located at the 40 Broad Street location.
Declining to name specific partners, Spanos explained that a withdrawal in support resulted in the company having to work with far more limited resources. The Bitcoin Center NYC later grew out of those efforts, he told CoinDesk.
Coupled by the alleged conduct of the landlord, he said, the company was never able to act in its planned capacity and instead incurred unexpected 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 Catafago called “entirely unsubstantiated” in a filing dated 5th March.
A tale of two WBAs
Following the news that the WBA was declaring 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.
Correction: An earlier version of this article incorrectly stated that the World Bitcoin Association was intended to serve as a companion company to the Bitcoin Center NYC. The WBA is the official tenant of the 40 Broad Street, New York, location, and was originally intended to serve as a bitcoin advocacy group under that name. The Bitcoin Center NYC later grew out of those initial efforts. We apologize for this error.
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