Blockfi’s Chapter 11 Plan Approved, Moving Closer to Returning Funds to Clients
Crypto lender Blockfi is making progress in its efforts to return funds to clients after a bankruptcy judge confirmed its Chapter 11 plan. This plan lays out the steps for distributing the remaining assets to clients and attempting to recover additional funds. With more than 90% of voting creditors approving the plan, Blockfi is optimistic about providing client recoveries in a relatively quick manner compared to other crypto bankruptcies.
Distribution Process
Under the approved plan, Blockfi will first distribute the remaining digital assets back to clients who have funds in Blockfi Wallet accounts. After that, an initial distribution will be made to clients with funds in Blockfi Interest Accounts (BIAs) and retail crypto-backed loans. The company will notify BIA and loan clients via email, instructing them to withdraw their funds based on the recovery amounts approved by the plan. The withdrawal process for wallet accounts is expected to conclude before distributions to other clients begin.
Potential Increase in Payouts
Additional distributions to clients will depend on Blockfi’s success in recovering funds from the FTX bankruptcy case. Blockfi claims that FTX owes it money and plans to pursue litigation to obtain those assets. If any funds are recouped from FTX, it could lead to higher client payouts.
Finalization and Wind-Down Process
Before distributions can officially commence, the Bermuda court overseeing Blockfi’s international clients must recognize the approval of the U.S. bankruptcy court’s plan. Once this recognition is obtained, Blockfi can emerge from bankruptcy and proceed with the wind-down process outlined in the plan.
Hot Take: Positive Outlook for Client Recoveries
Blockfi’s Chapter 11 plan approval marks a significant step towards returning funds to its clients. With a high percentage of voting creditors supporting the plan and a clear distribution process in place, there is optimism for relatively quick client recoveries. The potential for additional funds from the FTX bankruptcy case further enhances the outlook for client payouts. As Blockfi moves closer to finalizing the plan and completing the wind-down process, clients can look forward to receiving their funds based on the approved recovery amounts. Overall, this development brings positive news for Blockfi and its clients.
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