A US bankruptcy court in Nevada has rejected the Chapter 11 filing of crypto neobank Banq. The court's decision was based on the judge's finding that the application was not a genuine attempt to reorganize the company, but rather a strategy to gain an upper hand in pending lawsuits. Judge Natalie M.
Cox, who presided over the case, stated that Banq's bankruptcy proceeding was an attempt to shield the company and its founder, Jon Jiles, from an investor lawsuit. The lawsuit, filed by N9, a major creditor, alleges that Jiles breached his fiduciary duties by prioritizing the interests of Prime Trust, a company where he is the founder and managing member, over those of Banq.
The court found that Banq's business operations were primarily focused on pursuing litigation against former CEO Scott Purcell, rather than generating revenue. The judge also noted that Jiles had funded the bankruptcy proceedings with a $225,000 loan, suggesting that the case was designed to obstruct N9's ability to pursue Jiles for breach of fiduciary duty. Ultimately, the court ruled that the case was a dispute between Banq, Purcell, and Jiles, rather than a legitimate bankruptcy proceeding.