Key Takeaways
- All qualified bids must be sent to parties by February 20 deadline.
- Reportedly, BlockFi has already received interest from bidders for various assets
- To participate in the bidding process, potential bidders are expected to deliver written proposals to each of the “co-counsel to the debtors.”
Bankrupt crypto lender BlockFi has received court approval to sell its crypto mining asset as part of its efforts to repay the creditors. Bidders for BlockFi’s crypto mining assets would have until February 20 to submit bids, and the creditor’s representatives will have until March 16 to object to the sale of the assets to the qualified bidders.
Court reasoned that the sale of assets would help maximize recovery and “realizable value” of the company. Commenting on the development, BlockFi lawyer Francis Petrie of law firm Kirkland & Ellis stated,” Given the practical realities of the debtors’ circumstances, and the current volatility in the cryptocurrency market, we need to act quickly to preserve the value of our assets.”
Petrie has reportedly informed the bankruptcy court that the crypto lender has received interest from bidders for various assets and further expects more to come. As per court order, to participate in the bidding process, potential bidders are expected to deliver written proposals to each of the “co-counsel to the debtors.”
The proposal must include the specific assets that the potential bidder is interested in buying, the proposed purchase price, as well as details on how they will finance the assets. The latest development also comes amid reports that BlockFi has plans to sell off $160 million in loans backed by 68,000 Bitcoin mining machines as part of bankruptcy proceedings.
The crypto lender filed for Chapter 11 bankruptcy in November, citing its exposure to the now-collapsed crypto exchange FTX. BlockFi had significant exposure to FTX after it received a $400 million line of credit in July, following the collapse of the Terra ecosystem in May. Reportedly, at the time of its bankruptcy, BlockFi sold around $239 million of its own cryptocurrency assets to cover bankruptcy expenses and warned that approximately 70% of its employees would be laid off.
According to company sources, BlockFi already started the process of the sale of the loans last year. However, some of the loans have already defaulted and seem to be undercollateralized, owing to a decline in the market prices of Bitcoin mining equipment. As per bankruptcy filing, BlockFi owes its 50 largest creditors $1.3 billion and has between $1 billion and $10 billion in assets and liabilities.
