In a pivotal turn inside a Texas bankruptcy court Tuesday, Linqto and its unsecured creditors’ committee unveiled a breakthrough agreement that could redefine how customers are compensated in the company’s Chapter 11 plan. The deal promises investors the chance to receive in-kind payment of securities rather than just cold cash, marking a striking shift from traditional bankruptcy recoveries.
The agreement, announced before U.S. Bankruptcy Judge Alfredo R. Perez, lays the groundwork for a resolution that acknowledges the unique nature of Linqto’s platform—an investment gateway that once boasted of giving individuals access to startups before their Wall Street debuts.
$500M in Securities at Stake
At the heart of the dispute lies more than $500 million in securities spread across 11,000 customer accounts. Questions over ownership had threatened to spiral into drawn-out litigation, but counsel for both the debtor and the committee told the court they struck an “agreement in principle.”
Linqto attorney Samuel Schwartz confirmed that the committee agreed not to challenge ownership, while the debtor pledged to design a Chapter 11 plan ensuring customers could reclaim securities in kind.
Committee counsel Robert Stark emphasized why this mattered:
“It is not what they thought they would be getting in their arrangement, and it should not be what they’re getting coming out,” he said, warning against simply liquidating securities for cash.
