BlockFi: Moving Forward with Chapter 11 Plan
The bankrupt crypto service provider, BlockFi, is proceeding with its Chapter 11 plan, urging eligible voters to accept it by September 11, 2023, for the return of customer funds.
Main Breakdowns:
- BlockFi and the Committee of Unsecured Creditors are moving forward with the Chapter 11 plan, which has been conditionally approved by the US Bankruptcy Court.
- The plan aims to maximize recovery for customers and provide the fastest possible distribution of funds.
- BlockFi is urging all claimants to vote for acceptance of the plan by the September 11 deadline.
- Mark Renzi, Chief Restructuring Officer of BlockFi, is confident that the plan will expeditiously return crypto to clients.
- Once the bankruptcy plan is approved, BlockFi will focus on recovering funds from other failed companies to optimize client recoveries.
How is BlockFi’s Chapter 11 Plan Organized?
The plan offers customers the opportunity to obtain a release exempting them from BlockFi’s claims and causes of action. This release applies to all customers except those who have withdrawn $250,000 or more from BlockFi’s accounts or wallets.
Main Breakdowns:
- Customers who don’t opt for a voluntary third-party release can obtain a release exempting them from BlockFi’s claims.
- Customers who transferred and withdrew amounts less than $250,000 from BlockFi’s wallets before the platform’s break are not subject to reclamation.
- Claims of less than $3,000 will receive a one-time cash distribution equal to 50% of their claim.
The Chapter 11 Claim
BlockFi filed for Chapter 11 on November 28, 2022, after indefinitely suspending withdrawals. Chapter 11 allows companies to undergo a restructuring process despite filing for bankruptcy.
Main Breakdowns:
- The suspension of withdrawals indicated insolvency on the part of BlockFi.
Hot Take:
BlockFi’s move to proceed with its Chapter 11 plan shows its commitment to maximizing recovery for customers and expeditiously returning crypto to clients. By urging eligible voters to accept the plan, the company aims to provide the fastest possible distribution of customer funds. However, the focus on recovering funds from other failed companies may prolong the process and dilute client assets. It remains to be seen how successful BlockFi’s Chapter 11 plan will be in achieving its goals.