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- BlockFi has progressed towards a favorable outcome by making multiple iterations of its Chapter 11 plan.
- Judge Michael A. Kaplan delivered the approval during a court hearing held on 26 September.
In a significant development for the crypto lending platform BlockFi, a United States Bankruptcy Court in New Jersey, has given the green light to its liquidation plan. This has brought creditors one step closer to potential repayments.
Bankruptcy Judge Michael A. Kaplan delivered the approval during a court hearing held on 26 September.
BlockFi has progressed towards this favorable outcome by making multiple iterations of its Chapter 11 plan. The company initially presented the liquidation plan to the bankruptcy court on 28 November. It subsequently filed three amendments on 12 May, 28 June, and 31 July, as court filings document.
Court approves BlockFi’s plan, creditor repayments nearing reality
The approval of BlockFi’s liquidation plan became possible after the company successfully resolved a contentious dispute with the creditors’ committee concerning the firm’s senior management.
A court filing dated 25 September revealed that the BlockFi creditors committee acknowledged the settlement. It is believed to have alleviated concerns about additional administrative fees and expenses that might have eroded creditor recoveries.
Significantly, BlockFi’s bankruptcy became intertwined with the collapse of FTX [FTT]. The lending platform pointed to that as a critical factor in its downfall.
However, the creditors’ committee also raised questions about BlockFi’s relationship with FTX and its former CEO Sam Bankman-Fried, suggesting a more complex backdrop to the situation.
The path forward for BlockFi and its creditors
The extent to which unsecured creditors will receive repayment depends on BlockFi’s ongoing legal battles, particularly those involving FTX and other bankrupt cryptocurrency firms.
This pivotal factor underscores the importance of the company’s legal endeavors in securing favorable outcomes for its creditors.
Estimates suggest that BlockFi owes a staggering sum of up to $10 billion to a vast pool of creditors. Among these creditors, the three largest are collectively owed a staggering $1 billion, while the crypto hedge fund Three Arrows Capital anticipates the repayment of $220 million.
BlockFi is navigating these turbulent waters with the legal representation of respected law firms, Kirkland & Ellis LLP and Haynes and Boone LLP.
Source: https://ambcrypto.com/blockfi-receives-court-approval-for-liquidation-plan/