The Latest Court Ruling
A recent ruling by U.S. Bankruptcy Judge Michael Kaplan has breathed some life into the negotiations between the bankrupt giants FTX and BlockFi. On November 13, the judge lifted an automatic hold that had been imposed on the proceedings, thus allowing the FTX debtors to finally pursue their claims against BlockFi.
What Does This Mean for Debt Recovery?
FTX debtors now have the green light to present their arguments, defenses, and any counterclaims regarding BlockFi as part of the ongoing bankruptcy saga. However, the order is not all sunshine and rainbows—it clearly states that FTX debtors will not have any rights to receive an affirmative distribution from BlockFi. It’s like heading to a buffet but leaving your wallet at home!
A Little History: How Did We Get Here?
Both FTX and BlockFi sought the shelter of Chapter 11 bankruptcy in November 2022, following the unexpected blow-up at FTX at the start of that month. At that time, BlockFi estimated it had around $355 million trapped on the FTX platform along with a whopping $671 million owed by Alameda Research. That’s a serious chunk of change tied up in a tangled web!
Setting a Date for Mediation
Following the court’s order, both parties are urged to file for mediation in the U.S. Bankruptcy Court for the District of Delaware, aiming for a booking no later than December 24, 2023. Mark your calendars, folks; this is one meeting you won’t want to miss!
BlockFi’s Positioned Testimony
In a twist that could rival soap operas, BlockFi CEO Zac Prince testified against former FTX head honcho Sam Bankman-Fried during his high-profile criminal trial. Prince revealed that BlockFi’s woes stemmed directly from the collapse of FTX. A staggering statement noted by Prince indicated that had FTX not imploded, BlockFi might have weathered the storm of the crypto bear market just fine—but instead, they lost over a billion dollars in the fallout.
The Light at the End of the Tunnel?
In August, the court allowed BlockFi to start repaying its U.S.-based Wallet customers, although withdrawals were initially on ice. Fast forward to October, and BlockFi finally announced positive news, stating they would begin repaying some creditors, making withdrawals available for nearly all Wallet customers. It’s a sigh of relief for many who had been left in the lurch!
Conclusion: The Road Ahead
As the mediation date approaches, both companies have the opportunity to settle their differences and perhaps provide closure for their numerous creditors. With both entities navigating the rocky waters of bankruptcy, one can only hope they find a way to resurface with at least a lifeboat full of hope amidst the turbulent seas of insolvency.
