The customers of BlockFi, a cryptocurrency lending platform that recently filed for bankruptcy, have moved one step closer to receiving their payouts. The United States Bankruptcy Court in New Jersey approved BlockFi’s liquidation plan, as stated in a court filing on September 26.
The repayment amount received by BlockFi’s unsecured creditors will largely depend on the outcome of the firm’s legal battle against FTX and other bankrupt cryptocurrency companies. BlockFi initially submitted its liquidation plan to the bankruptcy court on November 28. However, it was required to make several amendments before it was ultimately approved. The first, second, and third amended plans were submitted on May 12, June 28, and July 31 respectively.
The approval of BlockFi’s liquidation plan comes after the firm settled a long-standing dispute with the creditors committee regarding the company’s senior management. A court filing on September 25 revealed that the creditors committee acknowledged the settlement, recognizing that it likely reduced additional administrative fees and expenses that could have affected the recoveries from the liquidation process.
BlockFi’s failure has been attributed to FTX’s collapse by the lending platform itself, despite concerns raised by the creditors committee about BlockFi’s relationship with FTX and its former CEO, Sam Bankman-Fried.
Estimates suggest that BlockFi owes up to $10 billion to over 100,000 creditors. This includes a significant debt of $1 billion to its three largest creditors and $220 million to the bankrupt crypto hedge fund Three Arrows Capital.
BlockFi is being represented by law firms Kirkland & Ellis LLP and Haynes and Boone LLP throughout the bankruptcy proceedings.
In conclusion, the approval of BlockFi’s liquidation plan by the United States Bankruptcy Court in New Jersey is a significant development for the cryptocurrency lending platform’s customers. The outcome of the ongoing legal battle and the successful implementation of the liquidation plan will ultimately determine the repayment amounts received by the creditors.
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