Key takeaways:
- BlockFi has announced that the US Bankruptcy Court has provisionally authorized its disclosure statement.
- Clients claiming $3,000 or less will be included in the convenience claim class and will get a one-time cash payment from the BlockFi estate equivalent to 50% of their claim.
BlockFi has announced that the United States Bankruptcy Court for the District of New Jersey has provisionally authorized its disclosure statement, signaling a step forward in the reorganization process.
In a joint statement released on August 2, 2023, BlockFi and the Official Committee of Unsecured Creditors urged all eligible parties to vote in favor of the plan before the voting date of September 11. The Chapter 11 cases will be successfully resolved with the plan’s approval, which will also make it easier to restore client funds. Mark Renzi, BlockFi’s Chief Restructuring Officer, stated:
“We are confident that our Plan provides the best path to expeditiously return crypto back to our clients and we strongly urge BlockFi’s clients to vote to accept it,”
The lender stated that when the bankruptcy plan is approved, its primary focus will be on recovering money from several bankrupt companies, including Alameda Research, FTX, Three Arrows Capital, Emergent, Marex, and Core Scientific. The main goal is to maximize client recoveries while fending against third-party claims that could materially weaken client assets.
The strategy reportedly gives customers the option for releases if they choose not to decline a voluntary third-party release, which relieves them from any claims and causes of action BlockFi may have against them. Most clients are covered by this release, with the exception of those who took a withdrawal of $250 000 or more from a BlockFi Interest Account (BIA) or a BlockFi Private Client (BPC) account on or after November 2, 2022.
Following the agreement, BlockFi will also refrain from recovering any sums under $250,000 that customers legitimately moved from BIAs or BPCs to BlockFi Wallet and withdrew prior to the platform’s stop on November 10, 2022. Clients claiming $3,000 or less will be included in the convenience claim class and will get a one-time cash payment from the BlockFi estate equivalent to 50% of their claim.
In June, the US Securities and Exchange Commission (SEC) agreed to postpone collecting a $30 million penalty from the insolvent bitcoin lender until all creditors had been paid in full. This amount represents the unpaid portion of a $50 million settlement that the company and the regulator reached in February 2022.
