**Linqto Shareholders Seek Bankruptcy Case Transfer to Delaware**
Shareholders of the defunct fintech startup Linqto Inc. have petitioned a federal judge in Texas to transfer the company’s bankruptcy proceedings to Delaware, arguing that they would receive better protection from the new management’s decisions. In a court filing submitted on Wednesday, investment firm Sapien Group stated that shareholders aim to contest actions taken by Linqto’s board following the appointment of a new CEO, Dan Siciliano, who replaced founder Bill Sarris.
The filing claims that the new management established a corporate entity named Linqto Texas to facilitate the bankruptcy filing in Texas rather than Delaware, where the parent company is incorporated. Delaware has long been recognized as a preferred jurisdiction for corporate filings, but its reputation has recently come under scrutiny from some tech leaders who argue that the state’s business courts are biased against founders, including high-profile figures like Elon Musk. In response, Texas lawmakers have been actively encouraging companies to relocate their corporate registrations to Texas.
Sapien’s filing asserts that Linqto shareholders should be allowed to challenge the current management in Delaware’s federal bankruptcy court, citing that the board’s actions have disregarded shareholders’ rights under Delaware law. The filing describes the Texas bankruptcy case as a clear example of “improper forum shopping.”
In a statement, Linqto defended its decision to file for Chapter 11 restructuring in Texas, emphasizing that the choice was made to maximize the value of claims for its customers. The company noted that any U.S. company can file for bankruptcy in federal court as long as there is some economic connection to the jurisdiction, a rule that critics argue allows management to seek out favorable judges.
For the transfer to occur, Houston-based federal judge Alfredo R. Perez must approve Sapien’s motion. Delaware’s business courts are known for handling shareholder lawsuits against company executives, including cases involving Musk, who faced legal challenges over his compensation package before deciding to reincorporate Tesla and SpaceX in Texas.
Linqto’s new management has accused previous executives of mismanaging the company by misleading customers into believing they owned shares in 111 privately-held companies valued at over $500 million. The firm had marketed opportunities for its 13,600 customers to invest in private companies before they went public, a privilege typically reserved for large institutional investors.
**FAQ**
*What is the main issue in Linqto’s bankruptcy case?*
Linqto shareholders are seeking to move the bankruptcy case from Texas to Delaware, claiming that the new management’s actions have violated their rights and that Delaware’s courts would provide better protection for shareholders.