BlockFi Liquidation Plan Approved By Court
BlockFi's liquidation plan approved by US Bankruptcy Court. Creditors may receive 35-63% of claimed amounts. Wallet holders can withdraw 100% of funds.
The crypto lending platform, BlockFi, has been under the spotlight following its bankruptcy filing. The United States Bankruptcy Court in New Jersey recently approved BlockFi's liquidation plan.
BlockFi Liquidation Plan Approved.
On September 26, 2023, Bankruptcy Judge Michael A. Kaplan gave his approval for BlockFi's third amended Chapter 11 plan. This decision comes after BlockFi's initial submission of its liquidation plan to the bankruptcy court on November 28. The lending platform had to subsequently submit three amended plans, with the final one receiving the court's endorsement.
The lending platform attributed its downfall to the collapse of FTX, despite concerns raised by the creditor's committee regarding BlockFi's association with FTX and its former CEO, Sam Bankman-Fried.
The core of the liquidation plan revolves around repaying BlockFi's creditors. Estimates suggest that BlockFi owes a staggering $10 billion to over 100,000 creditors. This includes a debt of $1 billion to its three largest creditors and an additional $220 million to the bankrupt crypto hedge fund, Three Arrows Capital.
The repayment amount for BlockFi's unsecured creditors hinges on the outcome of its legal battles against FTX and other bankrupt cryptocurrency firms. According to the approved liquidation plan, unsecured creditors might receive between 35% and 63% of their claimed amounts. However, these figures are tentative, and the final amounts could vary.
It's worth noting that BlockFi wallet holders stand in a unique position. They are eligible to withdraw 100% of their funds, as wallet funds are deemed customer property and are thus exempt from bankruptcy proceedings. In a court filing dated September 25, the BlockFi creditors committee recognized that the settlement probably decreased the possibility of incurring extra administrative fees and costs that might have diminished the overall recoveries.