BlockFi Inc., the cryptocurrency lending platform that filed for Chapter 11 bankruptcy on November 28, 2022, has secured a conditional green light from the United States Bankruptcy Court for the District of New Jersey.
The Conditional Approval, granted on August 2, 2023, endorses BlockFi’s Disclosure Statement and brings the company a step closer to a comprehensive financial reorganization under Chapter 11.
In a joint statement released by the troubled crypto firm and the Official Committee of Unsecured Creditors, all relevant parties are urged to cast their votes in favor of the proposed plan by the looming September 11, 2023, deadline. A successful vote in favor of the plan holds the potential to swiftly resolve the Chapter 11 cases, enabling the release of trapped client funds.
Should the plan gain final approval, the company’s immediate focus will shift toward the retrieval of funds from a number of defunct entities, including Alameda Research, FTX, Three Arrows Capital, Emergent, Marex, and Core Scientific.
This targeted approach aims to optimize client recoveries while countering third-party claims that could jeopardize the value of client assets.
Meanwhile, Mark Renzi of Berkeley Research Group, BlockFi’s Chief Restructuring Officer, reveals his confidence in the strategy, saying,
“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.”
BlockFi Draws Client-Focused Recovery Strategy
The plan offers clients an opportunity for relief through a voluntary third-party release. This release exempts eligible clients from the company’s potential claims and legal actions against them, thereby providing a measure of security.
It’s noteworthy that this release extends to most clients, with the exception of those who withdrew $250,000 or more from BlockFi Interest Accounts (BIA) or BlockFi Private Client (BPC) Accounts after November 2, 2022.
For clients with claims under $3,000 or those who opt to reduce their claim to this threshold, a special convenience claim class has been established. These clients will receive a one-time cash distribution from the firm’s estate, equivalent to 50% of their claim.
With the voting deadline fast approaching, BlockFi’s clients, whether directly involved in voting or not, are encouraged to familiarize themselves with the intricacies of the plan as outlined in the Disclosure Statement. The future course of BlockFi’s revival hinges on the collective support and informed decisions of all stakeholders.