BlockFi, the bankrupt crypto lender, has received conditional approval from the U.S. Bankruptcy Court in New Jersey for its reorganization plan.
In a joint announcement made on August 2, 2023, BlockFi and its Creditors revealed that the reorganization plan outlines the company’s strategy to settle its creditors, return assets to clients, and recover funds from debtors. According to the official statement, the plan
“maximizes recovery for clients and provides for the quickest possible distributions to clients.”
One of the key aspects of the plan is BlockFi’s intention to distribute cash to creditors with claims under $3,000 and those willing to reduce their claims to that amount.
Additionally, the company will offer client releases to those who qualify, meaning they would be exempt from future claims by BlockFi. However, this exemption will not apply to clients who withdrew over $250,000 from their BlockFi Interest Accounts (BIA) or BlockFi Private Client Accounts (BPC) after November 2, 2022.
The plan also reveals BlockFi’s intention to concentrate its efforts on pursuing claims and legal actions in ongoing litigations against several debtors, including Alameda, FTX, 3AC, Emergent, Marex, and Core Scientific. With more than $1 billion at stake, the outcomes of these litigations are expected to substantially impact the lender to fully repay its creditors and clients.
To ensure transparency and enable client participation, BlockFi’s creditors will receive a copy of BlockFi’s Disclosure Statement and detailed voting instructions. Eligible creditors can vote against or in favour of the plan, while non-eligible creditors will receive information explaining their non-voting status.
For their votes to count, eligible creditors must submit them to Kroll, the claims, noticing, and solicitation agent, on or before September 11, 2023, at 4:00 p.m. prevailing Eastern Time.
BlockFi had initially presented its Chapter 11 reorganization plan to the United States Bankruptcy Court in Trenton, New Jersey, on May 12, 2023. In the plan, the company acknowledged that selling BlockFi may not generate sufficient funds to repay its top 50 creditors, who are collectively owed nearly $1.3 billion.
However, BlockFi has faced criticism from its creditors, who accuse the company of intentionally delaying the legal proceedings. They alleged that the crypto lender’s activities both before and during the proceedings suggest an ulterior agenda. As a result, they filed a motion requesting the court to facilitate the swift transfer of the platform’s assets to the new management because doing so conflicts with hidden BlockFi’s agenda.
BlockFi suspended its operations on November 11, 2022, and filed for bankruptcy on November 28, 2022. The platform’s collapse has been attributed to the downfall of FTX, which led to a “lack of clarity” and ultimately resulted in BlockFi’s failure.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
