Storj Files Chapter 11, Proposes Equity Path for STORJ Holders

Storj Labs filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of West Virginia and said it will continue operating its decentralized storage network during the court-supervised restructuring.

The company wrote in an open letter that ordinary operations and customer services will continue and that parent company Inveniam will keep supporting the business. The letter added that the company’s liabilities “largely predate its current strategy and are too substantial to resolve through business growth alone.” It also stated that “the network continues to operate normally and its token’s utility is unchanged.”

Management plans to propose a reorganization that could allow STORJ tokenholders to receive equity in the reorganized company. The company has not disclosed how tokenholder eligibility would be determined, whether a token snapshot or lockup would be required, or how much equity might be allocated.

Any proposal would have to follow bankruptcy priority rules and obtain court approval before it could be implemented.

The filing presents a legal question about whether holders of a utility token can acquire an ownership stake through a Chapter 11 reorganization. The case may test how courts and creditors treat token-based communities when a business seeks to reorganize.

Storj began in 2014 as an open-source, peer-to-peer cloud storage project that lets users rent storage from other network participants rather than rely on centralized providers. The company is among the longest-running decentralized infrastructure projects in the crypto sector.

Market data showed the STORJ token trading around $0.072 at the time of the filing.

The bankruptcy petition arrives in a month that included other crypto-related Chapter 11 filings. Movement Labs filed under Subchapter V in mid-July, and Poolin filed Chapter 11 later in July as it pursued a court-supervised sale of mining assets. Some firms in the sector have chosen orderly wind-downs without filing for bankruptcy.

Storj did not provide a timetable for its restructuring or detailed terms for a token-to-equity mechanism. The company said it will work through the bankruptcy process under court supervision while maintaining network services and engaging with stakeholders on a potential reorganization plan.