On Tuesday, October 20, 2026, a Missouri federal judge denied competing requests for summary judgment in a breach-of-contract lawsuit over an unpaid bitcoin loan, finding that key facts and legal questions remain unresolved.
U.S. District Judge Beth Phillips of the Western District of Missouri ruled against both plaintiff Nicholas T. Foster and defendants Kaboomracks, Inc. and A.R.T. Digital Holdings Corp. in the case, filed October 7, 2025.
According to the order, Kaboomracks, a Delaware corporation, borrowed bitcoin from four lenders on August 19, 2024, under a single loan agreement. Foster, one of the lenders, provided 1.41 bitcoin. The other lenders were Brian Snyder, Honey Badger Mining, and Robert Van Kirk. All four were directors of Kaboomracks at the time.
Foster received more than two million additional shares of company stock and was to be repaid 1.41 bitcoin within 12 months, plus 8 percent annual interest. The agreement is governed by Delaware law.
On November 15, 2024, Kaboomracks, A.R.T. and a non-party A.R.T. subsidiary, Resonance Merger Sub, Inc., executed a merger agreement. Under it, the subsidiary was merged into Kaboomracks, which survived, and outstanding Kaboomracks shares were converted into A.R.T. Series F Voting Convertible Preferred Stock. Foster was not repaid when the loan came due in August 2025.
Defendants argued the loan agreement was invalid because it amounted to self-dealing between a corporation and its directors. The court noted that the parties did not conduct a choice-of-law analysis and said it would focus on Delaware law.
The judge wrote that the Delaware statute cited by defendants, Section 144, appears to address director liability rather than whether a contract is binding. She added that the statute was amended in February 2025, and that the parties did not explain which provisions apply or whether the transaction met the statute’s “fairness” safe harbor.
Foster cited unanimous-consent documents to support board approval, but the order said those documents do not mention the loan agreement.
The court also observed that even if the agreement were unenforceable, Kaboomracks could not necessarily keep the bitcoin, though no party addressed that possibility.
On A.R.T.’s liability, the judge said she was inclined to agree that a parent company or shareholder is generally not liable for a corporation’s debts absent circumstances such as piercing the corporate veil. She noted Foster identified no merger agreement provision or legal authority showing A.R.T. assumed the debt.
However, because facts surrounding the merger remain unclear, including a separate “Plan and Agreement of Merger” not in the record, she denied A.R.T.’s motion so the record could be developed further.
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