Understand your rights as a Linqto Customer

The securities you “purchased” through Linqto were intended to be held by SPVs (special purpose vehicles) owned by the company in which you, as an investor, would obtain a beneficial interest through membership units in a corresponding SPV. Although you received shares in one or more SPVs, evidenced by stock certificates, an LLC operating agreement and one or more signed subscription agreements, the debtors have stated that the securities were never properly allocated to the SPVs and the SPVs were not properly formed in the first place. 

Nearly all of the securities are held by the Debtors at an entity called Linqto Liquidshares LLC, but because of this management failure, the Debtors claim that you have no right to the underlying securities or any appreciation value and that your rights are limited to claims against the Debtors as a general unsecured creditor. While we have not yet seen a proposed plan from the Debtors, your claim recovery may be limited to a cash distribution or an interest in a successor vehicle, as opposed to the actual securities you “purchased.”

Recoveries from the bankruptcy case will depend on the total value of Linqto’s assets, legal challenges from regulators, class action claimants and other stakeholders (including non-customer creditors and equity investors in Linqto Inc.) and the bankruptcy plan process. 

The average bankruptcy case takes 2-3 years to conclude.  Although the professionals are motivated to move fast in this case given limited assets to fund the cases beyond the customer securities, there is no set timeline and there remain many complex issues to resolve. We expect that the process will take at least 6 months and possibly more than a year if there are substantial regulatory, tax or other challenges to any proposed plan.  

You can wait and follow the bankruptcy process or you can explore selling your claim through Xclaim’s marketplace for immediate cash. Selling is optional, anonymous, and gets money in your pocket to reinvest how you choose.

Xclaim has helped claimholders in similar high-profile bankruptcies involving fraud, large groups of retail investors and complex customer issues arising from an asset base likely to fluctuate or appreciate significantly over the course of the bankruptcy. We were one of the largest intermediaries for trading in FTX, Voyager, Celsius, BlockFi, Genesis and other major bankruptcies in the past three years. Xclaim has helped creditors recover faster on more than $1 billion of claims. Linqto customers can benefit from some of the same trusted tools and marketplace access used by claimholders in those other complex cases.

The process of trading claims in bankruptcy is well established and governed by a few basic rules, including the requirement to provide notice to the court following a trade.

Xclaim’s widely-accepted form claim transfer agreements have been used in thousands of transactions and represent fair, market-neutral terms. This enables buyers and sellers to quickly transact with confidence without spending thousands of dollars to hire lawyers to draft documents from scratch. Every case has its nuances and trades may also involve more bespoke terms that need to be reflected in the final agreement. Xclaim’s form trade agreement for Linqto has been designed with those nuances in mind. Although most sellers don’t engage lawyers to sell their claims, when they do, Xclaim works collaboratively with counsel for both the buyer and seller to get deals done fast and efficiently. We always encourage our customers to seek legal advice from experienced counsel if they have questions.