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A Nova Scotia judge overseeing the restructuring of Canadian cryptocurrency exchange QuadrigaCX said he will approve an order to transition the proceedings into a bankruptcy case.

Quadriga Fintech Solutions, which owned and operated the QuadrigaCX trading platform, was granted creditor protection earlier this year after the death of its chief executive, Gerald Cotten.

Mr. Cotten, 30, died last December while on his honeymoon in India, leaving 115,000 of the platform’s users collectively owed $250-million. Mr. Cotten, who was Quadriga’s sole director and ran the company primarily from his laptop with a handful of contractors, was the only person who knew how to access the company’s cryptocurrency holdings, his widow, Jennifer Robertson, has said in documents filed with the court.

During a court hearing on Monday, Justice Michael Wood said he is prepared to issue an order that will transition the proceedings, which are currently under the Companies’ Creditors Arrangement Act (CCAA), into a bankruptcy case.

Ernst & Young Inc., the court-appointed monitor overseeing the search for $180-million worth of Quadriga’s missing cryptocurrency holdings, recommended the switch to bankruptcy in an April 2 report. Such a move would reduce costs, potentially leaving more money available to repay creditors, according to Ernst & Young. In addition, the likelihood of Quadriga restructuring and emerging from CCAA protection “appears remote,” the monitor said in its report.

Justice Wood also said he is prepared to approve a voluntary agreement that will prevent Ms. Robertson from selling or transferring any assets held by Mr. Cotten’s estate, Ms. Robertson or any of the entities she controls, which include a property management firm and a trust. The couple owned millions of dollars’ worth of properties in British Columbia and Nova Scotia, as well as a 51-foot sailboat and a Cessna airplane.

Ernst & Young said it sought the agreement with Ms. Robertson because it appears that Mr. Cotten mixed personal and corporate funds.

“During the course of the monitor’s investigation into Quadriga’s business and affairs, the monitor became aware of occurrences where the corporate and personal boundaries between Quadriga and its founder Gerald Cotten were not formally maintained,” Ernst & Young said. “It appeared to the monitor that Quadriga funds may have been used to acquire assets held outside the corporate entity.”

Ernst & Young is also seeking an order compelling various payment processors to hand over records and funds related to Quadriga. The cryptocurrency exchange had no corporate bank accounts and relied on third-party payment processors when customers wanted to fund their accounts or withdraw money.

Ernst & Young has faced challenges trying to retrieve funds and information from some of those companies, and is asking the court for help. Lawyers for the monitor and the payment processors are working on the wording of that order.

The next court hearing to tie up a number of loose ends relating to the CCAA process is scheduled for April 18.

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