Quote from: Scared on July 23, 2014, 07:43:11 PM

Quote from: Minor Miner on July 21, 2014, 10:55:57 PM

Quote from: Scared on July 21, 2014, 09:43:25 PM

Quote from: Minor Miner on July 21, 2014, 09:03:52 PM

Why don't we just ask questions here so everyone can read them? I have a lot of questions but so it is not confusing I will ask them one by one. I will be upfront and tell you that I think your offer is terrible and puts the creditors at more risk than they have now for recovery.
You have provided me details of your company's capitalization, yet you expect us all to invest in it. The deal means creditors could get zero. Just from hf's sworn testimony it looks like I will get minimum 50 to 75 percent back before the IP is even sold.
First question, please detail out how you feel lb is putting 10 million in cash in this business. If you plan to take over the business and it's assets and from that 10 million will be realized you really are not providing the money, the estate is. If you really plan to put real cash in this new business then why did you file with the court, the words Up to 8 million? That means you could put zero in after the two million (in claims not necessarily the amount you need to pay) is resolved. If you are sincere, please answer this first.

We still intend to host the telephone meeting because some things are just more quickly and effectively answered in an interactive setting. That said however, we are happy to answer your questions here as well as many of these questions seem to indicate large misunderstandings about what the 363 sale terms document says/means.

The current terms call for the formation of a new company (sometimes called NewCo in the documents). We are not taking over Hashfast, or its estate or anything else; we are forming an new company and it is buying some assets from Hashfasts estate.

Once this new company (NewCo) is formed, Liquidbits/its investors will transfer $10 million to the new company in cash. This cash will then be used by NewCo to pay $2 million to the Hashfast estate for administrative/priority expenses and to satisfy executory contracts (who by law would be paid ahead of you or us anyway), and $8 million to pay to convert the chips and wafers into usable mining rigs and get them hosted (which is how the money to pay everyone back will be generated).

I think from your question you may have been thinking we were going to do something like give $10 million to the estate, then take over the estate and immediately get our money back. As you can see from the above explanation, this is simply not the case.

If that is the truth, it does not correspond with what you filed with the court. You have not filed with the court that you will fund the company with 10 million dollars of equity. Your document does not say that. It says 2 million. You have obligated yourselves to nothing more in the court filed document. So why are you on here stating 10 million will be put in newco immediately?
You also need to provide the math behind your claim that under liquidation we will only get 25 cents on the dollar since treat math does not add up to the sworn testimony that there are more than 8 million in inventory to be sold. Then you have the IP that can be sold. Those two alone get everyone over 80 cents on the dollar.
Why don't you list the inventory that you claim is only worth 25 cents?

The short answer is that is says $10 million in the documents, but you may not be looking in the right place. You will note that the filing or petition for the 363 sale was not made by Liquidbits but by the Hashfast estate (because they are the ones who must do that per court rules). Accordingly, their filing only address the components which will directly interact with them such and cash, stock, and Notes/IOUs they will be given and inventory and IP license that they will give. As such it does not discuss the capitalization of NewCo because they are not directly part of it. However, if you continue all the way to the end, you will see in exhibit A the Terms Sheet from Liquidbits which covers all the components we will be involved (which gives a more complete picture. Under the heading of capitalization of the new company, it states quite clearly and specifically that we would provide $8 million to convert the boards which combined with the $2 million identified in the document under consideration (article 2) is the $10 million we have been referring to.

Regarding the inventory, the $8 million valuation in the testimony is a fantasy. You will note that the attorneys specifically noted that the individual was not an expert appraiser and that this was just his opinion. They could just as easily given sworn testimony that in their personal opinion the inventory was worth $25 million. The fact that this statement is sworn does not provide it any extra credibility, as it would be functionally impossible to prosecute someone for perjury, or hold them civilly liable for offering a personal opinion about the value of something.

I would not ask you to simply trust us however. Hashfast has been making limited sales of chips to keep the lights on and pay some bankruptcy expenses. It is our understanding that they are having difficulty selling these chips at $125 each. Given that there are 27,000 chips remaining for bulk liquidation or transfer to Liquidbits, a valuation of $8 million would equate to a price of just under $300 per chip. In a bulk liquidation scenario, it is highly probable that the unit cost of the chips would be even lower than the current $125, as people/companies buy in bulk to get a lower unit cost, not a higher one. Further the price which one might realistically expect to get for these chips is bounded by the competing chips/rigs in the marketplace. Specifically the BitMain AntMiner S3 is sold in rig form for $0.75 per ghash/s and a power consumption of .77 watts at the wall. When you factor in the cost of mounting HashFast chips, installing cooling units, and in some cases cutting the wafers into chips of about $400 per unit, what you find is that Hashfasts estate would need to be selling the chips with a final cost of $100 to achieve a cost per ghash of $0.78 in order to compete with chips already in inventory and being sold. Even at this reduced price, they would still be a difficult sell as they have worse power consumption at 1.1 watt per ghash/s

So using a realistic price of $100 per chip, this equates to approximately $2.7 million in chip inventory. The intellectual property consists of little more than plans for a 16nm chip, which would take months and millions of dollars to produce, and then would be at best equivalent to what is already coming out now, and likely much lower performance than what would be available then. Consequently, it would be highly generous to assume a value of $2 million for the intellectual property. In addition, about $1 million (beyond the debts for Hashfast) is owed on this IP, so that the net value would, using a generous value equate to about $1 million.

This results in a total liquidation value of $3.7 million. From this there would need to be deducted the $2 million in priority/secured claims, which by law get paid before general unsecured creditors. This then leaves $1.7 million to be split among $12 million in claims. This would translate to a recovery of about 14% for each general unsecured creditor. If these chips wind up selling for $80 per chip, or if the IP sells for $1.5 million instead of $2million (both entirely likely situations), then the recovery for each general unsecured creditor drops to 10%. In the unlikely event that they are able to get $150 per chip, the recovery for general unsecured creditors would be approximately 25%. This is how we arrived at the estimated recovery rates listed earlier. We stand by these numbers, and think that anyone who thoroughly investigates this matter will arrive at the same conclusion.

Excuse me while I slash my wrists! I'm going to assume it will be even worse than this by the time said chips are actually sold. My guess is I'll be lucky to recover 0.08-0.12 on the dollar by the time it's all said and done :/