Movement Labs, the original development company behind Movement, a blockchain built with Meta's Move programming language, didn't file an ordinary Chapter 11 bankruptcy.
- Instead, the company filed under its legal name, MVMT Labs, and elected Subchapter V, a streamlined bankruptcy process for small businesses, as Thomas Braziel, the founder of 117 Partners, pointed out in an X post on July 22.
That detail changes who controls the case, and, potentially, who keeps whatever value remains after the company's spectacular collapse.
- Court records show that the case was filed on July 15 and that a restructuring plan is due by October 13.
Under Subchapter V, Movement Labs gets to write the bankruptcy plan itself, while creditors usually don't get their own formal committee and the company's existing managers generally stay in charge.
The court appointed Jeffrey Schwendeman, a restructuring adviser at RPA Advisors, as the Subchapter V trustee.
His ordinary role is to help negotiate a plan and oversee the process, although the court can give him broader investigative powers or remove management for misconduct.
That distinction may be particularly important because Movement's actual network operations have already moved elsewhere.
- Move Industries, a legally separate company led by Torab Torabi, said it isn't part of the bankruptcy and continues operating normally.
What remains inside MVMT Labs may therefore consist largely of debts, corporate rights and potential legal claims rather than a functioning blockchain business.
- The filing followed a year-long fallout from the token's launch, when a disputed market-making deal allowed 66 million MOVE to be sold soon after trading began, triggering investigations, exchange suspensions, the removal of co-founder Rushikesh "Rushi" Manche and the transfer of core development work to a separate company, Move Industries.
Movement Labs keeps control
Because MVMT Labs remains in control during the bankruptcy, it can also decide whether to pursue lawsuits on the company's behalf.
- That means any potential claims involving Rentech, an intermediary in the MOVE token deal, and Web3Port, a Chinese market maker, would initially stay with Movement Labs instead of automatically passing to an independent liquidator.
The court filings reviewed by The Coinformer don't yet show that Movement Labs has sued either company or that litigation is the main purpose of the bankruptcy.
Still, the company could potentially use the process to reduce its debts, keep control and pursue any claims that might recover money.
The founders may keep their stakes
The bankruptcy route may also help preserve the founders' ownership. Manche owns 34.25% of MVMT Labs, while Cooper Scanlon, its other co-founder, owns the remaining 65.75%.
- Manche is also the company's largest unsecured creditor, claiming more than $1.6 million.
Its existing owners could also keep their stakes without first paying every unsecured creditor in full, as long as the plan meets the court's fairness rules and commits enough money over three to five years.
One possible problem
MVMT Labs estimated that it owes between $1 million and $10 million, while Subchapter V is generally limited to companies with no more than $3.4 million in qualifying debt.
That doesn't automatically make the filing invalid because disputed, uncertain or uncalculated claims may not count toward the limit.
But creditors or the bankruptcy trustee could still challenge its eligibility once more detailed figures are filed.