BlockFi will liquidate its crypto lending platform in an effort to pay back creditors, according to a New Jersey bankruptcy court document filed Friday.
BlockFi was granted more time to formulate their bankruptcy plan in late April. The debtors associated with the bankrupt crypto lender filed their amended reorganization plan and disclosure statement on Friday; the deadline previously agreed upon.
On June 12, 2023, the court will determine which creditors that have repayment claims will be considered eligible to vote on BlockFi’s restructuring plan. Creditors vested with voting rights by the court will then have until July 28, 2023 to cast a ballot supporting or rejecting the plan. They also have the option to opt out entirely. Creditors include about 100,000 BlockFi customers.
In a letter to creditors, BlockFi’s lawyers stressed that asset recovery for their clients hinges on lawsuits against firms they claim defrauded them, including FTX, Alameda and Three Arrows Capital.
“The results of that litigation may achieve prospective high-end recoveries exceeding 90% for certain classes of claims,” BlockFi wrote in the letter. “Client recoveries will be increased or decreased massively (with total swings in client recoveries potentially exceeding $1 billion) depending on whether BlockFi can succeed in these litigations.”
This comes after a major win for BlockFi customers who had crypto in custodial, non-interest bearing accounts. A judge said around $300 million in digital assets could be returned to those customers.
BlockFi froze transfers in early November last year, then declared bankruptcy on November 28, 2022. It was another firm caught in the collapse of FTX, and the unraveling process has been going on ever since.
Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.
Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.
Source: https://blockworks.co/news/blockfi-liquidate-crypto-lending-platform