Decentralized cloud storage provider Storj Labs has filed for Chapter 11 bankruptcy protection. The company said it plans to keep its network running while restructuring legacy liabilities and exploring an ownership pathway for STORJ tokenholders.
On Sunday, Storj said it filed the voluntary case in the US Bankruptcy Court for the Northern District of West Virginia. The company said ordinary operations and customer services would continue during the process, subject to court oversight, while its parent company, Inveniam, would continue to support the business.
The restructuring could become an unusual test of whether utility-token holders can participate in the ownership of a company emerging from bankruptcy.
In an open letter to its community, Storj said its liabilities largely predate its current strategy and are too substantial to resolve through business growth alone. It said the network continues to operate normally and its token’s utility is unchanged.
STORJ showed no significant immediate price reaction following the announcement, trading around $0.072 at the time of writing, according to CoinGecko.
Storj explores equity pathway for tokenholders
Storj said management intends to propose a mechanism allowing tokenholders to participate in the reorganized company’s equity.
However, Storj has not disclosed how tokenholder eligibility would be determined, whether participation would involve a token snapshot or lockup, or how much equity might be allocated. The company acknowledged that any plan must follow bankruptcy priorities and receive court approval.
Cointelegraph reached out to Storj for comment but did not receive a response before publication.
Storj is among the crypto industry’s longest-running decentralized infrastructure projects. Storj began in 2014 as an open-source peer-to-peer cloud storage project that sought to let users rent storage from other network participants rather than rely on centralized providers.
Related: BitMEX hit with 623 BTC lawsuit on day it announces shutdown
Storj’s bankruptcy filing comes in the same month as at least two other crypto companies sought Chapter 11 protection.
Movement Labs filed under Subchapter V on July 15 after months of turmoil linked to its MOVE token, while Bitcoin mining pool Poolin filed on July 22 as it pursued a court-supervised sale of two Texas mining sites.
BitMEX also announced in July that it would shut down after 11 years. Still, the derivatives exchange did not file for bankruptcy, instead opting for an orderly wind-down following a strategic review.
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