BlockFi’s Liquidation Plan Approved by Bankruptcy Judge
A bankruptcy judge, Michael A. Kaplan, has given approval to BlockFi’s third revised Chapter 11 plan during a court hearing. This decision brings the customers of the troubled cryptocurrency lending platform one step closer to receiving their payouts. The liquidation plan was endorsed by a United States Bankruptcy Court in New Jersey.
Reimbursement for Unsecured Creditors Depends on Legal Dispute Outcome
The extent of reimbursement for BlockFi’s unsecured creditors will depend on the resolution of the company’s legal dispute with FTX and other insolvent cryptocurrency companies.
BlockFi’s Journey to Approval
BlockFi initially submitted its first liquidation plan to the bankruptcy court on November 28. However, subsequent revisions were necessary, leading to the filing of three amended plans. The final plan was approved after a prolonged dispute with the creditors committee regarding the company’s senior management.
Optimism for Customer Repayments
The creditors committee acknowledged that BlockFi’s bankruptcy proceedings were contentious but emphasized that the settlement helped avoid administrative costs that could have reduced customer recoveries. They are optimistic that payments to BlockFi creditors could begin within this year.
BlockFi’s Outstanding Debts
BlockFi owes up to $10 billion to over 100,000 creditors. This includes $1 billion owed to its three largest creditors and $220 million to the bankrupt crypto hedge fund, Three Arrows Capital.
The Bankruptcy Saga
BlockFi suspended customer withdrawals in November following FTX’s collapse and subsequent bankruptcy. Initially, BlockFi intended to restructure its operations but later decided that liquidation was the best way to repay customers. FTX objected to BlockFi’s bankruptcy plan, citing unfair treatment towards FTX Claims and urging the court to reject it.
Hot Take: Approval Granted for BlockFi’s Liquidation Plan
BlockFi has received approval from a bankruptcy judge for its liquidation plan, bringing hope to its customers who are awaiting payouts. The decision paves the way for the resolution of BlockFi’s bankruptcy case and the commencement of repayments to creditors. Despite facing challenges and disputes, BlockFi is expected to expedite customer repayments compared to other insolvent crypto firms. This development marks a significant step forward in the bankruptcy proceedings and offers some relief to those affected by BlockFi’s collapse.
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